document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=712233>Question 712233</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Irene McGuinness is planning a vacation in Europe in 4 years, after graduation. She <BR>\n" );
document.write( "estimates that she will need $3,500 for the trip. \r<BR>\n" );
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document.write( "a. If her bank is offering 4-year certificates of deposit with 8% interest compounded<BR>\n" );
document.write( "quarterly, how much must Irene invest now to have the money for the trip? <BR>\n" );
document.write( "b. How much compound interest will be earned on the investment? \r<BR>\n" );
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document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #437809 by </B><A HREF=/tutors/aboutme.mpl?userid=stanbon><B>stanbon(75887)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=stanbon><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=437809\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> Irene McGuinness is planning a vacation in Europe in 4 years, after graduation. She estimates that she will need $3,500 for the trip.<BR>\n" );
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document.write( "a. If her bank is offering 4-year certificates of deposit with 8% interest compounded quarterly, how much must Irene invest now to have the money for the trip?<BR>\n" );
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document.write( "A(t) = P(1+(r/n))^(nt)<BR>\n" );
document.write( "3500 = P(1+(0.08/4))^(4*4)<BR>\n" );
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document.write( "3500 = P(1.3728)<BR>\n" );
document.write( "P = $2549.56<BR>\n" );
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document.write( "b. How much compound interest will be earned on the investment?<BR>\n" );
document.write( "Ans: 3500-2549.56 = $950.44<BR>\n" );
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document.write( "Cheers,<BR>\n" );
document.write( "Stan H.<BR>\n" );
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