Question

What lump sum would you need to invest at 10.00% interest compounded quarterly. so that your investment will be worth $35,000.00 after the following lengths of time. Round your answers to the nearest cent. You don't need to use commas to separate thousands in your answer, but it won't hurt if you do.

10 quarters?

10 years?

Answer 1

applying compounded quarterly formula

A = P ( 1 + r / 4 )^4t

amount = $ 35,000 , rate = 10 %

plugging the values in the formula

35000 = P ( 1 + .10 / 4 ) ^10

dividing both sides by  ( 1 + .10 / 4 ) ^10

P = 27343.75

so, one should invest $ 27,343.75

b) 10 years ( plugging t = 10 )

35000 = P ( 1 + .10/4 )^4*10

dividing both sides by  ( 1 + .10/4 )^4*10

P = 35000 /  ( 1 + .10/4 )^4*10  

P = 13035.38

so, one must invest $ 13, 035.38