Question

Solve the problem. Round to the nearest cent.

Mark knows that he will need to buy a new car in 5 years. The car will cost $15,000 by then. How much should he invest now at 8%, compounded quarterly, so that he will have enough to buy a new car?
a. $9452.54
c. $12,328.91
b. $11,025.45
d. $10,094.57

Answer 1

Answer:

He invest $10101.01.

Step-by-step explanation:

Given : Mark knows that he will need to buy a new car in 5 years. The car will cost $15,000 by then.

To find : How much should he invest now at 8%, compounded quarterly, so that he will have enough to buy a new car?  

Solution :

Using compound interest formula,

$A=P(1+r)^t$

Where, A is the amount  A=$15000

P is the principle P=?  

r is the rate r=8%=0.08

t is the time t= 5 years

Substitute the value,

$A=P(1+r)^t$

$15000=P(1+\frac{0.08}{4})^{5\times4}$

$15000=P(1+0.02)^{20}$

$15000=P(1.02)^{20}$

$15000=P\times 1.485$

$P=\frac{15000}{1.485}$

$P=10101.01$

Therefore, He invest $10101.01.

Answer 2

Answer:

d

Step-by-step explanation:

x - initial investment

8% - annual rate

x·=15,000,

so x = 10094.54    

ANSWER: $10,094.57