a.We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.
27000=P*(1.03)^6
P=27000/(1.03)^6
=27000*0.837484257
=$22612.07(Approx).
b.We use the formula:
A=P(1+r/4)^4n
where
A=future value
P=present value
r=rate of interest
n=time period.
27000=P*(1+0.03/4)^(4*6)
P=27000/(1+0.03/4)^(4*6)
=27000*0.835831404
=$22567.45(Approx)
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