Find the present value of the future value.
-Find the required annual interest rate, to the nearest tenth of a percent, for $5200 to grow to $6500 if interest is compounded quarterly for 7 years.
A) 1.6%
B) 0.8%
C) 4.0%
D) 3.2%

Question

Quizplus · Accepted Answer

To find the required annual interest rate, we use the formula for compound interest: FV = PV(1 + r/n)^(nt). Here, FV = $6500, PV = $5200, n = 4 (quarterly), and t = 7 years. Solving for r gives approximately 3.2% when rounded to the nearest tenth.

Find the Present Value of the Future Value