If you want to have $12,500 in 57 months,how much money must you put in a savings account today? Assume that the savings account pays 4.5% and it is compounded quarterly; round to nearest $1.
A) $8,459
B) $10,106
C) $10,387
D) $11,129

Question

Quizplus · Accepted Answer

We can use the compound interest formula to solve for the present value:

PV = FV / (1 + r/n)^(nt)

where PV = present value, FV = future value, r = annual interest rate, n = number of times compounded per year, and t = time in years.

Plugging in the given values, we get:

PV = 12500 / (1 + 0.045/4)^(4*4.75)

PV = 12500 / (1.01125^19)

PV = $10,106.27

Rounding to the nearest dollar, we get the answer as $10,106, which is option B.

If You Want to Have $12,500 in 57 Months,how Much