# math

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Find the present value of \$31,000 due in 4 yr at the given rate of interest.

(a) 6%/year, compounded quarterly

\$ ?

(b) 3%/year, compounded quarterly

\$ ?

• math -

a. P = Po(1+r)^n.

P = \$31,000. = Value in 4 yrs.

Po = Initial value.

r = (6%/4) / 100% = 0.015 = Quarterly %
rate expressed as a decimal.

n = 4Comp./yr * 4yrs = 16 Compounding
periods.

P = Po(1.015)^16 = \$31,000.
Po*1.26899 = 31000
Po = \$24,428.96 = Present value.

b. Same procedure as "a".

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