Sophia is going to invest in an account paying an interest rate of 3.4% compounded monthly. How much would Sophia need to invest, to the nearest dollar, for the value of the account to reach 1,450 in 14 years?

Lösung

S o p hia 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 3.4% co m p o u n d e d m o n t h l y . Ho w m u c h w o u l d S o p hia 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 1, 450 in 14 ye a rs ?

Principal : 901.44

Schritte zur Lösung

Translate the problem into an equation:

1450 = P (1 + \frac{0.034}{12})^{12 \cdot 14}

Löse nach

P, 1450 = P (1 + \frac{0.034}{12})^{12 \cdot 14} : P = 901.44

Principal : 901.44