00:01
This problem says, how much do you need to invest at 7 % interest compounded quarterly in order to have $4 ,000 in 12 years? round our answer to the nearest cent.
00:10
So our goal is to have this $4 ,000 in 12 years at this given rate, but it is compounded quarterly.
00:15
So since it's compounded quarterly, we're going to use the formula y equals a times 1 plus our rate divided by n raised to the nt.
00:24
And in our case, our y value is our final amount, and 4 ,000 is the final amount we're trying to reach.
00:29
What we don't know is the initial investment, which is what we're trying to solve for.
00:33
So we'll leave that as a times 1 plus our rate.
00:36
And our rate was given as 7%, but we need to use the decimal representation, which is 0 .07 divided by our n value.
00:43
And our n value is the number of times we're compounding in a year.
00:46
So since we're compounding quarterly, that's four times in a year...