You have discovered an investment opportunity that earns a(n) 3% rate of interest compounded quarterly. Which of the following amounts is approximately equal to the amount you should deposit today to have $8,000 in five years? Use the formula method. (Do not round any intermediary calculations, and round your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The formula for compound interest is A = P(1 + r/n)^(nt), where A is the future value, P is the present value, r is the annual interest rate, n is the number of times per year that the interest is compounded, and t is the number of years. In this case, we have A = $8,000, r = 3%, n = 4 (since the interest is compounded quarterly), and t = 5. Plugging these values into the formula, we get:$8,000 = P(1 + 0.03/4)^(4*5)$8,000 = P(1.0075)^20$8,000 = P(1.1593)P = $8,000/1.1593P = $6,890 (rounded to the nearest dollar)Therefore, the amount that should be deposited today to have $8,000 in five years is approximately $6,890.

You Have Discovered an Investment Opportunity That Earns A(n) 3