Asked by Andrew Torres on May 17, 2024
Verified
James Parker wants to buy a new motorcycle 4 years from now. In addition to trading in his current motorcycle, he estimates that he will need an additional $2,000. Compute the amount that James must invest now if he has to earn 12% compounded quarterly. (Use Tables 16-1A&B or 16-2A&B or a calculator.)
Compounded Quarterly
The process of calculating interest on both the initial principal and the accumulated interest of previous periods on a quarterly basis.
- Determine the prospective value of investments through the utilization of the compound interest equation.
- Use calculators or tables specified for financial purposes to solve issues regarding the time value of money.
- Discern the implications of disparate compounding cycles on the enlargement of investments.
Verified Answer
AM
ANAMIKA MISHRAMay 18, 2024
Final Answer :
0.12 ¸ 4 = 0.03; 4 ´ 4 = 16;
$2,000 ´ 0.62317 = $1,246.34 invest now
$2,000 ´ 0.62317 = $1,246.34 invest now
Learning Objectives
- Determine the prospective value of investments through the utilization of the compound interest equation.
- Use calculators or tables specified for financial purposes to solve issues regarding the time value of money.
- Discern the implications of disparate compounding cycles on the enlargement of investments.
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