If you want to have $11,750.00 in 4 years and 3 months, how much should you deposit today in an investment fund that is earning interest at a rate of 3.50% compounded quarterly?

To determine how much you should deposit today to have $11,750.00 in 4 years and 3 months with an interest rate of 3.50% compounded quarterly, we can use the formula for the present value (PV) of a compound interest investment:

\[
PV = \frac{A}{\left(1 + \frac{r}{n}\right)^{nt}}
\]

Where:
- $ PV $ is the present value (the amount to be deposited today).
- $ A $ is the future value (the amount you want to have in the future).
- $ r $ is the annual interest rate (as a decimal).
- $ n $ is the number of times that interest is compounded per year.
- $ t $ is the time in years.

Given:
- $ A = 11,750.00 $ dollars
- $ r = 3.50\% = 0.035 $
- $ n = 4 $ (since the interest is compounded quarterly)
- $ t = 4 $ years and 3 months = $ 4.25 $ years

Plugging in the values:

\[
PV = \frac{11,750}{\left(1 + \frac{0.035}{4}\right)^{4 \times 4.25}}
\]

\[
PV = \frac{11,750}{\left(1 + 0.00875\right)^{17}}
\]

\[
PV = \frac{11,750}{\left(1.00875\right)^{17}}
\]

Now, we calculate $ \left(1.00875\right)^{17} $:

\[
PV = \frac{11,750}{1.15432}
\]

\[
PV = 10,178.78
\]

You should deposit **$10,178.78** today to have $11,750.00 in 4 years and 3 months.

Would you like to explore this further or ask another question?

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Here are 8 related questions:

1. How would the initial deposit change if the interest rate was 4.00% instead of 3.50%?
2. What would be the future value if you deposited $10,000 today under the same conditions?
3. How does the compounding frequency (quarterly vs. annually) impact the present value needed?
4. What is the formula for calculating the present value with continuous compounding?
5. How much would you need to deposit if you wanted $15,000 in the same timeframe?
6. How would the deposit amount change if the investment period was 5 years instead of 4 years and 3 months?
7. What is the total interest earned over the 4 years and 3 months in this scenario?
8. Can you calculate the present value if the compounding frequency was monthly instead of quarterly?

**Tip:** Always adjust the time period to years when using the compound interest formulas to ensure accurate results.

Learn how to calculate the present value needed today to achieve a future amount using compound interest at 3.50% annually compounded quarterly. Example problem: If you want $11,750.00 in 4 years and 3 months, find out how much you should deposit today. Includes step-by-step solution and formula explanation.

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