How much must be invested now to have $100,000 in 15 years at 2.5% interested compounded quarterly?

The answer to the above question is $60,000.

Question

How much must be invested now to have $100,000 in 15 years at 2.5% interested compounded ​quarterly?
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The answer to the above question is $60,000.

Quizplus · Accepted Answer

To find out how much must be invested now to have $100,000 in 15 years at 2.5% interest compounded quarterly, we use the formula for the present value of a future amount: $PV = \frac{FV}{(1 + r)^n}$, where PV is the present value, FV is the future value, r is the interest rate per period, and n is the total number of periods. The interest rate per quarter is $2.5\% / 4 = 0.625\%$, or 0.00625 as a decimal. The total number of quarters in 15 years is $15 \times 4 = 60$. Plugging these values into the formula gives us $PV = \frac{100,000}{(1 + 0.00625)^{60}}$, which calculates to approximately $77,221.23, not $60,000.

How Much Must Be Invested Now to Have $100,000 in 15