We can use the formula for compound interest to solve for the present value:
A = P(1 + r/n)^(nt)
where A is the future value, P is the present value, r is the annual interest rate, n is the number of times the interest is compounded during the year, and t is the number of years.
In this case, we have:
A = 120,000
r = 7% = 0.07
n = 4 (quarterly compounding)
t = 7
So we can solve for P:
P = A / (1 + r/n)^(nt)
P = 120,000 / (1 + 0.07/4)^(4*7)
P = 78,313.61
Therefore, you should invest $78,313.61 presently to accumulate $120,000 after 7 years invested in an account with 7% interest compound quarterly.
The desired future accumulated amount is 120,000 after 7 years invested in an account with 7% interest compound quarterly. How much should you invest presently.
1 answer