Using the present value table, calculate how much should be invested today to have $11,200 in 6 years at 8% interest compounded quarterly.

A) 49,230.10
B) $6,963.28
C) $5,376.00
D) $2,766.16

Question

Using the present value table, calculate how much should be invested today to have $11,200 in 6 years at 8% interest compounded quarterly.

A) 49,230.10 
B) $6,963.28 
C) $5,376.00 
D) $2,766.16

Quizplus · Accepted Answer

Using the present value table, the factor for 8% interest compounded quarterly for 6 years is 0.5376. Therefore, $11,200 divided by 0.5376 equals $20,850. This is the amount that would be accumulated in 6 years at 8% interest compounded quarterly, so the present value required to yield this amount is $6,963.28.

Using the Present Value Table, Calculate How Much Should Be