# Count Gustav wants to renovate his castle in Boulogne in 3 years. He estimates the cost to be $3,000,000. Use Table 11-2 to find how much Count Gustav must invest now at 8 % interest compounded quarterly to have$3,000,000, 3 years from now.

### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
Publisher: Cengage Learning
ISBN: 9781305585447

### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
Publisher: Cengage Learning
ISBN: 9781305585447

#### Solutions

Chapter
Section
Chapter 11.II, Problem 6TIE
Textbook Problem
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## Count Gustav wants to renovate his castle in Boulogne in 3 years. He estimates the cost to be $3,000,000. Use Table 11-2 to find how much Count Gustav must invest now at 8 % interest compounded quarterly to have$3,000,000, 3 years from now.

Expert Solution
To determine

To calculate: The amount Count Gustav must invest now at 8% interest compounded quarterly to have $3,000,000, 3 years from now as he wants to renovate his castle in Boulogne in 3 years and estimates the cost to be$3,000,000.

### Explanation of Solution

Given information:

The compound Amount is $3,000,000. The interest rate is 8%. The period is 3 years. Formula used: Steps for using the present value table: Step I: Scan across the top row to find the interest rate per period. Step II: Look down that column to the row corresponding to the number of periods. Step III: The table factor found at the intersection of the rate-per-period column and the number-of-periods row is the present value of$1 at compound interest. Multiply the table factor by the compound amount to determine the present value.

Present Value:

Present Value = Table Factor × Compounded Amount

Calculation:

The provided interest rate 8% compounded quarterly,

84=2%

The interest should be used as 2% per period as,

The period will be taken as 12 periods as,

3×4=12 periods

Thus, the revised information will be as follows:

The compound amount is \$3,000,000

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