Q8: Oliver invested some 2 points
money 5 years ago at 12% p. a.
interest (compounded
quarterly) and now received a
payment of N$50000. How
much was his initial
investment?

The initial amount invested by Olivia is $ 27,683.79  

Explanation:

The amount of initial investment can be computed using the present value formula given below:

PV=FV*(1+rs/t)^-n*t

FV is the future amount which is $50,000

rs is the rate of interest which is 12%  per annum

t is the number of times interest is compounded yearly which is 4 times

n is the number of years the funds were invested i.e 5 years

PV=$50,000*(1+12%/4)^-4*5

PV=$50,000*(1+3%)^-20=$27,683.79  

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