Answer: PV = 3218.69
Explanation:
The formula for calculating compound interest is expressed as
FV = PV(1 + r/n) ^nt
Where
FV is the future value
PV is the initial value
r is the interest rate
n is the number of compounding periods in a year
t is the number of years
From the information given,
FV = 6500
r = 5.9% = 5.9/100 = 0.059
n = 4 because it was compounded quarterly
t = 12
By substituting these values into the formula,
6500 = PV(1 + 0.059/4)^4 * 12
6500 = PV(1.01475)^48
PV = 6500/(1.01475)^48
PV = 3218.69
