Question

How much money must be deposited at the end of each quarter to accumulate $25000 after 4 years? Assume the interest of 8% per year compounded quarterly?

Answer 1

Step-by-step explanation:

let, Principal=p

Rate of interest per unit time=

$\frac{r}{4}$

Number of units of time= 4n

Amount=a

Then,

$a = p(1 + \frac{ \frac{r}{4} }{100} ) ^{n}$

$25000 = p{(1 + \frac{ \frac{8}{4} }{100} })^{16}$

$25000 = p \times 1.3727$

$p = \frac{25000}{1.3727}$

$p = 18212.11$