A payment of 1500$ is due in three months.Find the equivalent value at nine months if the interest rate is 4% select one a:$1500 b:$1530 c:$1560 d:$1470

hexacordoK 2021-02-02 Answered
A payment of 1500$ is due in three months.Find the equivalent value at nine months if the interest rate is 4%
select one
a:$1500
b:$1530
c:$1560
d:$1470
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Expert Answer

stuth1
Answered 2021-02-03 Author has 97 answers

Given interest rate is 4% compounded quarterly
F.V=P.V(1+rk)nk
F.V=Future value
P.V= Present value
r=rate of interest
k=number of times compounded per year
n=number of years
steps:
r=4
k=4(since compounded quarterly)
n=3 months=312 years=(14)years
nk=44=1
substitute values in the above equation
P.V=1500(1+(0.044))
=1485.5
Find the equivalent value
r=4
k=4(since compounded quarterly)
n=9 months=912
P.V =$1485.15
F.V=P.V(1+(rk)nk)
F.V=1485.5(1+(0.044)9124
=$1530.15
Option B is correct

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