Barbara knows that she will need to buy a new car in 2 years. The car will cost $15,000 by then. How much should she invest now at 8%, compounded quarterly, so that she will have enough to buy a new car?
A) $12,802.36
B) $13,888.89
C) $13,868.34
D) $11,907.48

Question

Quizplus · Accepted Answer

To find the present value, use the formula for compound interest: $ P = \frac{F}{(1 + \frac{r}{n})^{nt}} $. Here, $ F = 15000 $, $ r = 0.08 $, $ n = 4 $, $ t = 2 $. Plugging in these values gives $ P = \frac{15000}{(1 + \frac{0.08}{4})^{4 \times 2}} \approx 12802.36 $.

Barbara Knows That She Will Need to Buy a New