If you wish to accumulate $205,000 in 6 years, how much must you deposit today in an account that pays a quoted annual interest rate of 15% with monthly compounding of interest? $76,353.67 $88,627.16 $117,874.12 $83,813.03 $147,121.08

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 26P
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If you wish to accumulate $205,000 in 6 years, how much must you deposit today in
an account that pays a quoted annual interest rate of 15% with monthly
compounding of interest?
$76,353.67
$88,627.16
$117,874.12
$83,813.03
O $147,121.08
Transcribed Image Text:If you wish to accumulate $205,000 in 6 years, how much must you deposit today in an account that pays a quoted annual interest rate of 15% with monthly compounding of interest? $76,353.67 $88,627.16 $117,874.12 $83,813.03 O $147,121.08
Expert Solution
Step 1

Future value (FV) = $205,000

Interest rate = 15%

Monthly interest rate (r) = 15%/12 = 1.25%

Period = 6 Years

Monthly period (n) = 6*12 = 72

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