Fabian is going to invest in an account paying an interest rate of 5.5% compounded annually. How much would Fabian need to invest, to the nearest ten dollars, for the value of the account to reach 1,240 in 13 years?

Solution

Fabian is going to invest in an account paying an interest rate of 5.5% compounded annually. How much would Fabian need to invest, to the nearest ten dollars, for the value of the account to reach 1, 240 in 13 years?

Solution

Principal : 618.22

Solution steps

Translate the problem into an equation:

1240 = P (1 + \frac{0.055}{1})^{1 \cdot 13}

Solve for

P, 1240 = P (1 + \frac{0.055}{1})^{1 \cdot 13} : P = 618.22

Principal : 618.22

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