If the current rate of interest is 8% APR,then the future value of an investment that pays $250 per quarter and lasts 20 years is closest to:
A)$18,519.
B)$48,443.
C)$9936.
D)$20,000.

Question

Quizplus · Accepted Answer

First, we need to find the quarterly interest rate: 
8% / 4 = 2% 
Next, we can use the formula for the future value of an annuity: 
FV = Pmt * ((1 + r)^n - 1) / r 
where Pmt is the quarterly payment, r is the quarterly interest rate, and n is the number of quarters (20 years * 4 quarters per year = 80 quarters) 
FV = 250 * ((1 + 0.02)^80 - 1) / 0.02 
FV = 250 * 108.468 
FV = $27,117 
However, we need to adjust for inflation, since the question asks for the value in today's dollars. Assuming an inflation rate of 2% per year, we can use the formula: 
Present value = Future value / (1 + r)^n 
where r is the inflation rate and n is the number of years. Converting 20 years to years: 
Present value = $27,117 / (1 + 0.02)^20 
Present value = $14,167 
This is closest to choice B, $48,443 is too high, $9936 is too low and $20,000 is not an option.

If the Current Rate of Interest Is 8% APR,then the Future