How much money must be deposited now in an account paying 8% annual interest, compounded quarterly, to have a balance of 1000 after 10 years? Show your work.

Solution

Solution

Principal : 452.89

Solution steps

Translate the problem into an equation:

1000 = P (1 + \frac{0.08}{4})^{4 \cdot 10}

Solve for

P, 1000 = P (1 + \frac{0.08}{4})^{4 \cdot 10} : P = 452.89

Principal : 452.89

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