The future value formula, given by
[tex]FV=P(1+\frac{r}{n})^{nt}[/tex]Can be used to obtain the Principal by substituting other values into the equation and solving for P
Step 1: List out the parameters given
FV =$8,700
r=7%=0.07
n=4 (since there are 4 quarters in a year)
t=6 (since it will be compounded 6 times a year)
Step 2: Substitute the values into the formula
[tex]8700=P(1+\frac{0.07}{4})^{4\text{ x 6}}[/tex][tex]8700=P(1+0.0175)^{24}[/tex][tex]\begin{gathered} 8700=P(1.0175)^{24} \\ 8700=1.5164P \end{gathered}[/tex]Solving for P
[tex]\begin{gathered} 1.5164P=8700 \\ P=\frac{8700}{1.5164} \end{gathered}[/tex]P=$5737.11
Option B is correct
