Question

Approximately how much principal would need to be placed into an account earning 3.575% interest compounded quarterly so that it has an accumulated value of $68,000 at the end of 30 years?
a.
$23,706
b.
$23,377
c.
$52,069
d.
$58,944

Answer 1

Quarterly rate = 0.03575/4 = 0.0089375, n = 30·4 = 120.

Present value = 68,000 / (1 + 0.0089375)^{120}
≈ 68,000 / 2.90879 ≈ $23,377

Answer: b. $23,377