Question

If you want to have $6,271 at the end of 19 years, how much must you invest now, if the interest rate is 13.9% per year, compounded quarterly?

Answer 1

To calculate the amount of investment that is needed to have $6,271 at the end of 19 years we have to calculate the present value.

Present value= Future value/( 1+ r/k) ^nk

Where r is the interest rate

and k is the compounded times a year

Present value= 6271/(1+ 0.139/4)^19*4

= 467.57

$467.57 must be invested today to have $6,271 at the end of 19 years if the interest rata is 13.9% per year, compounded quarterly.