What amount today is equivalent to $6,800 three years ago, if money earned 12% compounded quarterly over the past three years?
A) $8,872.46
B) $9,553.51
C) $9,695.17
D) $9,729.23
E) $4,769.38

Question

Quizplus · Accepted Answer

To find the equivalent amount today of $6,800 from three years ago with an interest rate of 12% compounded quarterly, we use the formula for compound interest: $A = P(1 + \frac{r}{n})^{nt}$, where $A$ is the amount of money accumulated after n years, including interest, $P$ is the principal amount (the initial amount of money), $r$ is the annual interest rate (decimal), $n$ is the number of times that interest is compounded per year, and $t$ is the time the money is invested for in years.Given:- $P = $6,800$- $r = 12\% = 0.12$- $n = 4$ (since the interest is compounded quarterly)- $t = 3$ yearsPlugging these values into the formula gives us:$$A = 6800(1 + \frac{0.12}{4})^{4*3}$$$$A = 6800(1 + 0.03)^{12}$$$$A = 6800(1.03)^{12}$$$$A ≈ $9,695.17$$Therefore, the amount today equivalent to $6,800 three years ago, with the given interest conditions, is approximately $9,695.17.

What Amount Today Is Equivalent to $6,800 Three Years Ago