Web Application Chapter 9 page 372

Marisa McSperrit's dedication to her Morgan horse is beginning to yield benefits. She has already been awarded two scholarships through her equestrian activities: a lower-level scholarship and a Grand Prix, the AMHI Dressage Achievement Award. Marisa wants to continue her training, but she would like to have her own stud service five years from now. Marisa needs to know, in addition to the value of the two scholarships, how much more she needs to invest today at 12% interest, compounded quarterly, to accumulate $20,000 for the start-up stud fee five years from now.

1. First, visit www.morganhorse.com/general.html to determine the total amount of the two scholarships. The information needed will be located under Dressage Scholarships.

2. Next, use the present value of a dollar table on page 372 of your textbook to determine the present value of $1 at 12% interest rate, compounded quarterly for five years. Set up the problem following Example 1 on page 371 of your textbook. How many periods? At what rate? What is the table factor?

3. Remember, Marisa already has the total amount of the two scholarships. How much more money does she need to invest?

Hint: The present value that was calculated less the total scholarship amount equals the additional amount of money she needs.

Show your work and include the date of the information used in your answer.

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