<PRE><B>Question 712233</B>
Irene McGuinness is planning a vacation in Europe in 4 years, after graduation. She estimates that she will need $3,500 for the trip.
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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?
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A(t) = P(1+(r/n))^(nt)
3500 = P(1+(0.08/4))^(4*4)
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3500 = P(1.3728)
P = $2549.56
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b. How much compound interest will be earned on the investment?
Ans: 3500-2549.56 = $950.44
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Cheers,
Stan H.
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