Question

it says "USE THE TABLES" but they didnt provide any?

Question 26 5 pts USE THE TABLES TO ANSWER THIS QUESTION. Pam wants to buy her first home in four years. She will need $25,000 as a down payment. Pam just won some money gambling and she has deposited it into her savings account. which is eaming 8% and compounds quarterly. How much should Pam set aside out of her winnings to have her down payment? What table will you look at to solve this problem? What column will you look at? What row will you look at? What is the factor (where the column meets the row)? How much should Pam set aside out of her winnings? 12pt Paragraph B IV Ae Tv *** Owords Question 27 5 pts

Answer 1

Answer : They are talking about the Future Value Table of $1.

We have Given Annual rate of 8%,

Compounding - Quarterly (4)

So, Interest Rate Per period (Quarter) = 8% / 4

= 2%

Total Number of periods = Number of years * Compounding

= 4 * 4

= 16

Now, we know that the table provides Interest rate in Row and Periods in Column, So we will look out for 2% row and 16 Periods Column, and the factor will be the cell where the Row of 2% and Column of 16 Periods will meet.

Present Value = Future Value / Fv Factor

= 25000 / 1.37279 [ We can also Calculate factor by usinf formulae = ( 1 + Rate)^ Period]

= $18211.088

So, She Need to step aside around $18211.088