Question

What is the discounted value of$1169.00 paid at the end of every three months for 7 years if interest is 7%per annum compounded monthly

the discounted value is ？

Answer 1

$1169 is paid at the end of every three months i.e at the end of every quarter for 7 years. Therefore , $1169 * 4 = $4676 is paid in a year.

Interest is given per annum compounded monthly i.e i(12) = 7%

The effective interest rate 'i' and the compounded quarterly interest rate 'i(4)' is calculated to solve the problem.