SOLUTION: JIM JONES, AN OWNER OF A BURGER KING RESTAURANT, ASSUMES, THAT HIS RESTAURANT WILL NEED A NEW ROOF IN 7 YEARS. HE ESTIMATES THE ROOF WILL COST HIM $9,000 AT THAT TIME. WHAT AMOUN

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Question 143833: JIM JONES, AN OWNER OF A BURGER KING RESTAURANT, ASSUMES, THAT HIS RESTAURANT WILL NEED A NEW ROOF IN 7 YEARS. HE ESTIMATES THE ROOF WILL COST HIM $9,000 AT THAT TIME. WHAT AMOUNT SHOULD JIM INVEST TODAY AT 6% COMPOUNDED QUARTERLY TO BE ABLE TO PAY FOR THE ROOF?
Answer by vleith(2517) About Me  (Show Source):
You can put this solution on YOUR website!
Look here --> http://www.frickcpa.com/tvom/TVOM_PV_SS.asp
PV+=+FV%2F%28%281%2Bi%29%5En%29+
In this case, FV is 9000.
annual interest rate is 6%, compounded quarterly. So the quarterly interest rate is 6%2F4%29 = 1.5% = 0.015
The number of compoundings is 7%2A4 = 28
Plug in and solve. PV = $5932
Note. if Jim jones offers grape kool-aide, opt for something else. ;)