SOLUTION: Cicily Montague, and author from Paris, sells the movie rights to her book and will recive 600,000 euros at the end of each quarter for the next 4years. Assuming that money is wor

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Question 397188: Cicily Montague, and author from Paris, sells the movie rights to her book and will recive 600,000 euros at the end of each quarter for the next 4years. Assuming that money is worth 6% compounded quarterly, what is the value of the movie rights?
I have the answer in the back of the book $847.875.843 but i am not coming up with that as the answer i think i am setting the problem up wrong.
Please Help!
Answer by josmiceli(19441) About Me  (Show Source):
You can put this solution on YOUR website!
Hi,
The regular compound interest rate formula which is
A+=+P%2A%281+%2B+%28r%2Fn%29%29%5E%28nt%29 does not work here because
It uses P, which is a lump of money that gets
compounded over time and gives A as a result.
I found a formula on the internet that is used for
periodic deposits in a bank, and the deposits are
compounded at a certain interst rate. The formula they
gave is:
A+=+M%28%281+%2B+%28r%2Fn%29%29%5E%28nt%29+-+1%29%2A%28n%2Fr%29
M is the regular deposit
r is the compound rate of interest
n is number of times per year interest is compounded
t is the number of years
A is amount accumulated after t years
------------------------------------------------------------
For this problem:
M = 600000 euros
r = .06
n = 4 (quarterly)
t = 4 years
-----------------------
A+=+M%28%281+%2B+%28r%2Fn%29%29%5E%28nt%29+-+1%29%2A%28n%2Fr%29
A+=+600000%28%281+%2B+%28.06%2F4%29%29%5E%284%2A4%29+-+1%29%2A%284%2F.06%29
A+=+600000%28%281+%2B+.015%29%5E16+-+1%29%2A66.6667
A+=+600000%281.26898+-+1%29%2A66.66667
A+=+600000%2A.26898%2A66.66667
A+=+600000%2A17.932001
A+=+10759200.54
I don't get the answer you're supposed to, either, so
I made a mistake, or this isn't the right formula.