Answer:
The amount of money that must be invested is $252.
Step-by-step explanation:
Present value formula:
The present value formula is given by:
[tex]P = \frac{F}{(1+r)^n}[/tex]
In which:
P is the present value.
F is the future value.
r is the interest rate.
n is the number of periods.
9% ANNUALLY
This means that [tex]r = 0.09[/tex]
COMPOUNDED QUARTERLY TO OBTAIN 1,000 IN 4 YEARS.
Obtain 1000 means that [tex]F = 1000[/tex]
Compounded quarterly in 4 years, so 4*4 = 16 periods and [tex]n = 16[/tex].
Amount of money that must be invested:
[tex]P = \frac{F}{(1+r)^n}[/tex]
[tex]P = \frac{1000}{(1+0.09)^{16}}[/tex]
[tex]P = 252[/tex]
The amount of money that must be invested is $252.
