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23 January, 10:57

Mathew knows that he will need to buy a new car in 4 years. The car will cost $15,000 by then. How much should he invest now at 10%, compounded quarterly, so that he will have enough to buy a new car?

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  1. 23 January, 11:43
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    Mathew should invest $10,104.37.

    A = $15,000 future value

    A = P (1 + r/4) ^n

    P = A / ((1 + r/4) ^n)

    P = 15000 / ((1 + 0.10/4) ^16)

    P = $10,104.37
  2. 23 January, 12:17
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    So let's start with the cost of the car

    It would be 15,000 in 4 years.

    Now that we have that, we will now multiply 4 by 10%, which will equal 40.

    Now, divide 40 by 15000 to get to 3750
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