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15 May, 10:09

Uptown industries just decided to save $3,000 a quarter for the next three years. The money will earn 2.75 percent, compounded quarterly, and the first deposit will be made today. If the company had wanted to deposit one lump sum today, rather than make quarterly deposits, how much would it have had to deposit today to have the same amount saved at the end of the three years?

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  1. 15 May, 10:18
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    Uptown industries have to deposit today $4,145.

    Explanation:

    To find the final capital at the end of the third year, we use the compound interest formula:

    Final Capital (FC) = Initial Capital (IC) * [ (1+interest (i)) ]^ (number of periods (n))

    FC=$3000*[1+2.75%]^ (12)

    FC = $4,145.35

    Then, Uptown industries have to deposit today $4,145.
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