Multiple compounding (PV): You need to have $15,000 in five years to pay-off a home equity loan. You can invest in an account that pays 5.75 percent compounded quarterly. How much will you have to invest today to attain your target in five years? (Round to the nearest dollar.)
A) $4,903
B) $11,275
C) $14,184
D) $12,250

Question

Quizplus · Accepted Answer

To find the present value, use the formula PV = FV / (1 + r/n)^(nt). Here, FV = $15,000, r = 0.0575, n = 4, t = 5. Plugging in these values, PV = $15,000 / (1 + 0.0575/4)^(4*5) = $11,275.

Multiple Compounding (PV): You Need to Have $15,000 in Five