Using technology, determine the present value given that you make quarterly payments of $1,635 at 4.2% compouded quarterly over a 3 year period. Round your answer to the nearest cent. a. $15,168.06 c. $19,180.84 b. $19,188.94 d. $18,344.05

Question

Mathematics

Fabian Murphy

1 January, 23:34

Using technology, determine the present value given that you make quarterly payments of $1,635 at 4.2% compouded quarterly over a 3 year period. Round your answer to the nearest cent. a. $15,168.06 c. $19,180.84 b. $19,188.94 d. $18,344.05

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Answers (1)

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Owen Poole · Answer 1

First, we determine the effective interest that should be used in the calculation based from the equation,

ieff = (1 + i/m) ^m - 1

Substituting the given,

ieff = (1 + 0.042/4) ^4 - 1 = 0.0427

Then, using the equation for the compound interest.

F = P x (1 + i) ^n

F = ($1,635) x (1 + 0.0427) ^3 = $1,853.51

The right answer is not among the choices.