SOLUTION: How much money must be deposited now in an account paying 7.25% annual interest, compounded quarterly, to have a balance of $1000 after 10 years?

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Question 1158425: How much money must be deposited now in an account paying 7.25% annual interest, compounded quarterly, to have a balance of $1000 after 10 years?
Answer by Shin123(626) About Me  (Show Source):
You can put this solution on YOUR website!
Let P be the amount you invest now. P%2A%281%2B0.0725%2F4%29%5E%2810%2A4%29=1000
P%2A%281.018125%29%5E40=1000. P=1000%2F%281.018125%29%5E40.
P=1000%2F2.05137. P=487.48. Check:
Solved by pluggable solver: Finance: Calculate the Future Value of Money
If P is the principal. r the interest rate in decimal, n the number of times it is compounded per year, and y the number of years that the money is kept, the future value is P%2A%281%2Br%2Fn%29%5E%28y%2An%29. Plugging in the numbers, we get 487.48%2A%281%2B0.0725%2F4%29%5E%2810%2A4%29. Simplifying, we get ,which can be rounded to highlight%28highlight_green%28highlight%281000.00%29%29%29 dollars.