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Adam is going to invest in an account paying an interest rate of 4.2% compounded quarterly. How much would Adam need to invest, to the nearest dollar, for the value of the account to reach 6,200 in 19 years?

Solution

Adam is going to invest in an account paying an interest rate of 4.2% compounded quarterly. How much would Adam need to invest, to the nearest dollar, for the value of the account to reach 6, 200 in 19 years?

Solution

Principal : 2803.05

Solution steps

Translate the problem into an equation:

6200 = P (1 + \frac{0.042}{4})^{4 \cdot 19}

Solve for

P, 6200 = P (1 + \frac{0.042}{4})^{4 \cdot 19} : P = 2803.05

Principal : 2803.05

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