Present value how much should be deposited in an account paying 8% interest compounded querterly in order to have a balance of $20,000 five years from now?

$13456 should be deposited.

Step-by-step explanation:

The principal was compounded quarterly. This means that it was compounded 4 times in a year. So

n = 4

The rate at which the principal was compounded is 8%. So

r = 8/100 = 0.08

It was compounded for 5 years. Therefore,

t = 4

The formula for compound interest is

A = P(1+r/n)^nt

A = total amount in the account at the end of t years. The total amount is given as $20000. Therefore

20000 = P(1+0.08/4)^4×5

21000 = P(1+0.02)^20

21000 = P(1.02)^20

P = 20000/1.486

P = $13456

d

step-by-step explanation:

77

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