Barbara knows that she will need to buy a new car in 3 years . The car will cost $15000 by then. How much should she invest now at 8%, compo

Question

Barbara knows that she will need to buy a new car in 3 years . The car will cost $15000 by then. How much should she invest now at 8%, compound quarterly,so that she will have enough to buy a new car?

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Isabelle 4 weeks 2021-09-25T21:53:48+00:00 1 Answer 0

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    2021-09-25T21:55:19+00:00

    Answer:

    Around $11827.40

    Step-by-step explanation:

    The formula for compounded interest is A=P(1+\frac{r}{n})^{nt}, where A is the desired amount, P is the amount you invest, r is the decimal rate, n is the number of times per year you compound the interest, and t is the number of years. You know A to be 15000, r to be 8% or 0.08, n to be quarterly or 4, and t to be 3. To find P, you can set up the following equation:

    15000=P(1+\frac{0.08}{4})^{4\cdot 3}

    15000=P(1.02)^{12}

    15000=1.2682P

    P\approx 11827.40 dollars

    Hope this helps!

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