Barbara knows that she will need to buy a new car in 3 years. The car will cost $15,000 by then. How much should she invest now at 7%, compounded quarterly, so that she will have enough to buy a new car?

Question

Mathematics

Shirley Mcintyre

26 April, 15:10

Barbara knows that she will need to buy a new car in 3 years. The car will cost $15,000 by then. How much should she invest now at 7%, compounded quarterly, so that she will have enough to buy a new car?

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Answers (1)

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Shania Osborn · Answer 1

A=p (1+I/k) ^tk

A future value 15000

I interest rate 0.07

K compounded quarterly 4

T time 3

p principle?

15000=p (1+0.07/4) ^ (4*3)

Solve for p

P=15,000: (1+0.07:4) ^ (4*3)

p=12,180.87