The International Monetary Fund is trying to raise 1100 bill

The International Monetary Fund is trying to raise $1,100 billion in 10 years for new funds to lend to developing countries. At 8% interest compounded quarterly, how much must it invest today to reach $1,100 billion in 10 years? (Use the following provided Table.)

Solution

Hi,

Please find the detailed answer as follows:

FV = 1100 (indicates the desired value)

Rate = 8%/4 = 2% (indicates the rate of interest)

Nper = 4*10 = 40 (indicates the total period)

PMT = 0 (indicates payment, if any)

PV = ? (indicates the amount to be deposited)

Amount to be Deposited = PV(Rate,Nper,PMT,FV) = PV(2%,40,0,1100) = $498.18 billion

Answer is $498.18 billion

Thanks.