Answer:
The correct answer is A.
Explanation:
Giving the following information:
Beginning three months from now, you will need $1,500 each quarter for the next four years to cover expenses.
We need to determine the present value needed to cover expenses. The interest rate is 0.35% per quarter.
First, we need to calculate the final value:
FV= {A*[(1+i)^n-1]}/i
A= quarterly expense= 1,500
i= 0.0035
n= 16
FV= {1,500*[(1.0035^16) - 1]/ 0.0035= 24,640.41
Now, we can calculate the present value:
PV= FV/(1+i)^n
PV= 24,640.41/ (1.0035^16)= $23,300.75
