The Elders hope to accumulate 8000 for a sunroom over the next 8 years. How much would they need to invest right now at 3.4% compounded quarterly to reach that goal? Do not round any intermediate computations. Round your answer to the nearest cent.

Solution

Solution

Principal : 6101.84

Solution steps

Translate the problem into an equation:

8000 = P (1 + \frac{0.034}{4})^{4 \cdot 8}

Solve for

P, 8000 = P (1 + \frac{0.034}{4})^{4 \cdot 8} : P = 6101.84

Principal : 6101.84

Popular Examples

Lucia opened a savings account and deposited 100.00. The account earns 5% interest, compounded monthly. If she wants to use the money to buy a new bicycle in 3 years, how much will she be able to spend on the bike?two more than three times a number is seven Jestoni deposits 520 into savings account that has a 3.5 % interest rate compounded monthly. What will be the:balance of Jestoni's savings account after 2 years?In 3 years, Bobby wants to buy a bicycle that costs 700.00. If he opens a savings account that earns 7% interest compounded annually, how much will he have to deposit as principal to have enough money in 3 years to buy the bike?A savings account earns an interest rate of 2.75% compounded monthly for an account with an initial deposit of 5,000 dollars . How much money will be in the account after 8 years? Round your answer to the nearest hundredth.