Posted by Patrice on .
You want to refurnish your home in 3 years. The interior decorator informs you that this will cost $25,000. What should be your payment into an account that gives 6% compounded quarterly?
I think that is how you would set it up.
You may want to wait for a math tutor to verify.
the quarterly rate will be .06/4 = .015
let the payment you make now be $x
x(1.015)^12 = 25000
x = 25000/(1.015^12
or you could use the formula
PV = Amt(1+i)^-n
present value = 25000(1.015)^-12