the International Monetary Fund is trying to raise $1,200 billion in 5 years for

Question

the International Monetary Fund is trying to raise $1,200 billion in 5 years for new funds to lend to developing countries. At 12% interest compounded quarterly, how much must it invest today to reach $1,200 billion in 5 years. ( use the table provided). (Do not round intermediate calculations. Enter your answer in billions of dollar rounded to 2 decimal polices.) Mier must pay a 12,50 0? E connect Delse Barahona DS8 WO1 9. 29 r, 5 years Er new hnds to lend to deveueng contes At 12% nteestcompoundedquarey how-hour e mest today toreach $1,200-nSyows, neh, taur caiculations. Entar your anser in tions of doitar rounded to 2 decia places eBook&Resources;

Explanation / Answer

Amount= Principle*(1+R/100)^t

Amount = 1,200 billion dollars

R = 12/4 = 3% = 0.03 (per quater)

t = 4 *5 = 20

So, 1200 = Principle*(1+0.03)^20

Principle = 1200/(1.03)^20 = 664.41 billion dollars.  

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