Explanation Given Information: The investment compounded quarterly at 2.3 % interest to have $ 125 , 000 in 11 years. Formula used: Compounding period can be defined as the duration or length of time from one interest payment to the next. If an investment made for 4 years at 6 % compounded annually (once per year) then it would have four compounding period which can be calculated by formula given below: Compounding periods = Term of investments ( years ) × m Here, m is the period per year. The interest rate per period can be calculated by dividing the annual, or nominal, rate by the number of periods per year, Interest rate per period = Nominal rate Period per year Present value by present value formula: Present value ( P V ) can be calculated when the compound amount ( A ) , Interest rate per period ( i ) and the number of compounding periods ( n ) are known. Present value ( P V ) = A ( 1 + i ) n Steps for solving the present value formula: Step I: Add 1 and the interest rate per period, i . Step II: Raise the sum from Step I to the n th power by using the y x key on your calculator. Step III: Divide the compound amount, A , by the answer from Step II. Calculation: Consider the investment compounded quarterly at 2.3 % interest to have $ 125 , 000 in 11 years and solve as below: Since, the variables-compound amount, time period (years), nominal rate and interest compounded are given; therefore, the compounding period can be calculated as below: Substitute the values in the formula for interest rate per period and simplify, Interest rate per period = Nominal rate Period per year = 2

Contemporary Mathematics for Business & Consumers - With LMS CengageNOW

8th Edition

ISBN: 9781337125468

Author: Brechner

Publisher: Cengage

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Chapter 11, Problem 37AT

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To calculate: The present amount of investment compounded quarterly at 2.3% interest to have $125,000 in 11 years for Jorge Rodriguez who would like to pay off his condo after retirement.

Round to the nearest whole dollar.

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Chapter 11, Problem 36AT

Chapter 11, Problem 38AT

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Chapter 11 Solutions

Contemporary Mathematics for Business & Consumers - With LMS CengageNOW

Ch. 11.I - Gail Parker invested $10,000 at 6% interest...Ch. 11.I - Jenny Chao invested $20,000 at 6% interest...Ch. 11.I - Prob. 3TIE Ch. 11.I - Jill Quinn invested $7,000 in a certificate of...Ch. 11.I - Prob. 5TIE Ch. 11.I - Prob. 1RE Ch. 11.I - For the following investments, find the total...Ch. 11.I - For the following investments, find the total...Ch. 11.I - Prob. 4RE Ch. 11.I - Prob. 5RE

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The present amount of investment compounded quarterly at 2.3 % interest to have $ 125 , 000 in 11 years for Jorge Rodriguez who would like to pay off his condo after retirement. Round to the nearest whole dollar.

Solution Summary: The author calculates the present amount of investment compounded quarterly at 2.3% interest for Jorge Rodriguez who would like to pay off his condo after retirement.

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To calculate: The present amount of investment compounded quarterly at 2.3% interest to have $125,000 in 11 years for Jorge Rodriguez who would like to pay off his condo after retirement.

Round to the nearest whole dollar.

Want to see the full answer?

Chapter 11 Solutions

The present amount of investment compounded quarterly at 2.3 % interest to have $ 125 , 000 in 11 years for Jorge Rodriguez who would like to pay off his condo after retirement. Round to the nearest whole dollar.

Solution Summary: The author calculates the present amount of investment compounded quarterly at 2.3% interest for Jorge Rodriguez who would like to pay off his condo after retirement.

Concept explainers

Videos

To calculate: The present amount of investment compounded quarterly at 2.3% interest to have $125,000 in 11 years for Jorge Rodriguez who would like to pay off his condo after retirement. Round to the nearest whole dollar.

Want to see the full answer?

Chapter 11 Solutions

To calculate: The present amount of investment compounded quarterly at 2.3% interest to have $125,000 in 11 years for Jorge Rodriguez who would like to pay off his condo after retirement.

Round to the nearest whole dollar.