Sarah is going to invest in an account paying an interest rate of 5.3% compounded quarterly. How much would Sarah need to invest, to the nearest dollar, for the value of the account to reach 1,030 in 5 years?

Solution

Sarah is going to invest in an account paying an interest rate of 5.3% compounded quarterly. How much would Sarah need to invest, to the nearest dollar, for the value of the account to reach 1, 030 in 5 years?

Solution

Principal : 791.6

Solution steps

Translate the problem into an equation:

1030 = P (1 + \frac{0.053}{4})^{4 \cdot 5}

Solve for

P, 1030 = P (1 + \frac{0.053}{4})^{4 \cdot 5} : P = 791.6

Principal : 791.6

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