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Molly Scupper wants to attend Clarke University. She will need $90,000 6 years from today. Assume Molly's bank pays 6% interest compounded quarterly. What must Molly deposit today to have $90,000 in six years? Verify your answer.

Respuesta :

irspow
This is similar to exponential growth problems...

F=Ir^t  F=final, I=initial, r=rate, t=time, 

The main difference here is that the annual rate is compounded quarterly so

90000=I(1+.06/4)^(4t)

90000=I(1.015)^(4t)  and since t=6 we have:

90000=I(1.015^24)

I=$62,958.95

verify...

F=62958.95(1.015^24)

F=$89999.996

F=$90000.00  rounded to nearest cent