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If you wish to accumulate $125,000 in 7 years, how much must you deposit today in an account that pays a quoted annual interest rate of 11% with quarterly compounding of interest

Sagot :

Anthougoidn

Answer:

You need to deposit $58,481.53 today.

Explanation:

a) Data and Calculations:

Future value expected = $125,000

Period of investment = 7 years

Interest rate = 11% compounded quarterly

The amount of deposit needed today to earn $125,000 in 7 years at annual interest rate of 11% is calculated as follows:

N (# of periods)  28

I/Y (Interest per year)  11

PMT (Periodic Payment)  0

FV (Future Value)  125000

Results

PV = $58,481.53

Total Interest $66,518.47

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