Determine the principal invested today at 8%/a compounded quarterly that will amount to $10000 in 4 years.?

Question

Determine the principal invested today at 8%/a compounded quarterly that will amount to $10000 in 4 years.?

Answer 1

The following information is needed:

Interest rate = 2% = 8% annual / 4 (compounded quarterly)

FV = $10,000

Number of periods = 4 years * 4 quarters = 16 periods

Payments each period = $0

The present value is $7,284.46

Excel formula:

PV = (.02,16,10000,0)

Period Balance                Interest

1               7,284.46                145.69

2               7,430.15                148.60

3               7,578.75                151.58

4               7,730.33                154.61

5               7,884.93                157.70

6               8,042.63                160.85

7               8,203.48                164.07

8               8,367.55                167.35

9               8,534.90                170.70

10             8,705.60                174.11

11             8,879.71                177.59

12             9,057.31                181.15

13             9,238.45                184.77

14             9,423.22                188.46

15             9,611.69               192.23

16             9,803.92               196.08

17           10,000.00

Sorry that Answers does not format the chart above well, but it presents the balance at the end of each quarter during the 16 quarters and the interest earned each quarter.

Hope this helps.