How much must be deposited into an account that pays 12.2% annual interest compounded quarterly to receive $13,422 after 5 years.

Question

How much must be deposited into an account that pays 12.2% annual interest compounded quarterly to receive $13,422 after 5 years.

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Thiên Thanh 2 months 2021-07-22T19:15:02+00:00 1 Answers 5 views 0

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    2021-07-22T19:16:05+00:00

    Answer:

    $7,359.65

    Step-by-step explanation:

    The computation of the amount that to be deposited is shown below:

    Here we have to calculate the present value

    As we know that

    Present value = future value ÷(1+ rate of interest)^years

    where,

    rate of interest = 12.2% ÷ 4 = 3.05%

    And, the years is = 5 × 4 = 20

    Now the present value is

    = $13,422 ÷ (1+ 3.05%)^20

    = $7,359.65

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