Videotech specializes in online security software development. It wants to have $65 million avail­able in 3 years to pay stock dividends. How much money must the company set aside now in an ac­count that earns interest at a rate of 12% per year, compounded quarterly? Solve using (a) tabu­lated factors, and (b) a single-cell spreadsheet function.

What will be an ideal response?


(a) P = 65,000,000(P/F,3%,12)
= 65,000,000(0.7014)
= $45,591,00
(b) Spreadsheet function: = PV(EFFECT(12%,4),3,,65000000) displays $-45,589,692

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