Kennedy is going to invest in an account paying an interest rate of 4% compounded quarterly. How much would Kennedy need to invest, to the nearest dollar, for the value of the account to reach 2,800 in 10 years?

Lösung

Ke nn e d y i s g o in g t o in v es t in an a cco u n t p a y in g an in t eres t r a t e o f 4% co m p o u n d e d q u a r t er l y . Ho w m u c h w o u l d Ke nn e d y n ee d t o in v es t, t o t h e n e a res t d o ll a r, f or t h e v a l u e o f t h e a cco u n t t o re a c h 2, 800 in 10 ye a rs ?

Principal : 1880.63

Schritte zur Lösung

Translate the problem into an equation:

2800 = P (1 + \frac{0.04}{4})^{4 \cdot 10}

Löse nach

P, 2800 = P (1 + \frac{0.04}{4})^{4 \cdot 10} : P = 1880.63

Principal : 1880.63