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Fatoumata is going to invest in an account paying an interest rate of 3.9% compounded monthly. How much would Fatoumata need to invest, to the nearest dollar, for the value of the account to reach 7,400 in 8 years?

Solution

Fatoumata is going to invest in an account paying an interest rate of 3.9% compounded monthly. How much would Fatoumata need to invest, to the nearest dollar, for the value of the account to reach 7, 400 in 8 years?

Solution

Principal : 5419.4

Solution steps

Translate the problem into an equation:

7400 = P (1 + \frac{0.039}{12})^{12 \cdot 8}

Solve for

P, 7400 = P (1 + \frac{0.039}{12})^{12 \cdot 8} : P = 5419.4

Principal : 5419.4

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