mth 156

a company needs $55,000 in 7 years for a new addition. To meet this goal, the company needs to deposit money in an acct today that pays 5% annual interest compounded quarterly. What amount should the company invest to total $55,000 in 7 years?

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

    P = $55,000.

    r = 5%/4/100% = 0.0125.

    n = 7yrs. * 4Comp./yr. = 28 Compounding
    periods.

    Solve for Po.

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