Question

Jim Ryan, an owner of a Burger King restaurant, assumes that his restaurant will need a new roof in 7 years. He estimates the roof will cost him $9,000 at that time. What amount should Jim invest today at 6% compounded quarterly to be able to pay for the roof

Answer 1

$\bf ~~~~~~ \textit{Compound Interest Earned Amount} \\\\ A=P\left(1+\frac{r}{n}\right)^{nt} \quad \begin{cases} A=\textit{accumulated amount}\to &\ 9000\\ P=\textit{original amount deposited}\\ r=rate\to 6\%\to \frac{6}{100}\to &0.06\\ n= \begin{array}{llll} \textit{times it compounds per year}\\ \textit{quarterly, thus four} \end{array}\to &4\\ t=years\to &7 \end{cases} \\\\\\ 9000=P\left(1+\frac{0.06}{4}\right)^{4\cdot 7}\implies 9000=P(1.015)^{28}\implies \cfrac{9000}{1.015^{28}}=P$