Chapter 4, Problem 27RE

### Calculus: An Applied Approach (Min...

10th Edition
Ron Larson
ISBN: 9781305860919

Chapter
Section

### Calculus: An Applied Approach (Min...

10th Edition
Ron Larson
ISBN: 9781305860919
Textbook Problem
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# Present Value How much should be deposited in an account paying 7% interest compounded quarterly in order to have a balance of $12,000 after 3 years? To determine To calculate: The amount that must be deposited in an account in order to get$12,000 after 3 years if 7% interest is compounded quarterly.

Explanation

Given Information:

The amount in the account after 3 years at the interest rate of 7% is $12,000 and interest is compounded quarterly. Formula used: The formula to compute the deposited amount is, P=A(1+rn)nt Where, P is the deposited amount, A is the amount after t years, r is the interest rate and n is the number of times compounded per year. Calculation: Consider that the amount in the account after 3 years at the interest rate of 7% is$12,000 and interest is compounded quarterly.

Here, A=\$12,000, r=7% and t=3 years.

The number of times compounded per year is 4 as the interest is compounded quarterly, that is, n=4.

Simplify the rate as,

r=7%=7100=0.07

Substitute 4 for number of times compounded per year, 0

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