Question

what of money deposited now a 8% compound quarterly will provide just enough money to pay a birr 1000 do 7 years from now?​

Answer 1

594.29

Step-by-step explanation:

A = P(1 + r/n)^(nt)

Where:

A is the future value (in this case, birr 1000),

P is the principal amount (the amount to be deposited now),

r is the interest rate (8% or 0.08),

n is the number of compounding periods per year (4 for quarterly compounding),

t is the number of years (7).

In this case, we need to find the value of P. We can rearrange the formula to solve for P:

P = A / (1 + r/n)^(nt)

Substituting the given values into the formula:

P = 1000 / (1 + 0.08/4)^(4*7)

Now, we can calculate P using a calculator or a spreadsheet:

P ≈ 1000 / (1.02)^(28)

P ≈ 1000 / 1.683

P ≈ 594.29