1 answer

Compound interest

Question:

Your uncle promises to give you $550 per quarter for the next five years starting today. How much is his promise worth right now if the interest rate is 8% compoundedquarterly

Answers

quarterly interest 2% = 0.02
periods n = 5*4+1 =21, end of quarters = 20 (starts from today)
PV = 550+550*(1.02^20-1)/(0.02*1.02^20) = 9543.29 ($) (ANSWER)

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