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Katherine is going to invest in an account paying an interest rate of 5.8% compounded monthly. How much would Katherine need to invest, to the nearest ten dollars, for the value of the account to reach 960 in 16 years?

Solution

Solution

Principal : 380.38

Solution steps

Translate the problem into an equation:

960 = P (1 + \frac{0.058}{12})^{12 \cdot 16}

Solve for

P, 960 = P (1 + \frac{0.058}{12})^{12 \cdot 16} : P = 380.38

Principal : 380.38

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