Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
-Inez wants to have $15,000 in 2 years. Use the present value formula to calculate how much Inez should invest now at 6% interest, compounded quarterly in order to reach her goal.
A) $13,349.95
B) $13,315.65
C) $12,231.90
D) $11,877.98

Question

Quizplus · Accepted Answer

The present value formula for compound interest is $ PV = \frac{FV}{(1 + \frac{r}{n})^{nt}} $. Here, $ FV = 15000 $, $ r = 0.06 $, $ n = 4 $, and $ t = 2 $. Calculating gives $ PV = \frac{15000}{(1 + \frac{0.06}{4})^{4 \times 2}} = 13315.65 $.

Narrative 11-1 Solve the Following Problems Using Either Tables 11-1 or 11-2