To help with her retirement savings, Donna has decided to invest. Assuming an interest rate of 3.59% compounded quarterly, how much would sh

Question

To help with her retirement savings, Donna has decided to invest. Assuming an interest rate of 3.59% compounded quarterly, how much would she have to invest to have $117,300 after 18 years?

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Acacia 2 months 2021-08-01T17:23:48+00:00 1 Answers 3 views 0

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    2021-08-01T17:25:12+00:00

    Answer:

    We get the value of Principal amount i.e initial investment = $61640

    Step-by-step explanation:

    Interest rate r = 3.59% or 0.0359

    Compounded quarterly n = 4

    Future Amount A = 117,300

    Time t = 18 years

    We need to find initial investment i,e Principal Amount P

    The formula used is: A=P(1+\frac{r}{n})^{nt}

    Putting values and finding P

    A=P(1+\frac{r}{n})^{nt}\\117300=P(1+\frac{0.0359}{4})^{4*18} \\117300=P(1+0.008975)^{72}\\117300=P(1.008975)^{72}\\117300=P(1.903)\\P=\frac{117300}{1.903}\\P=61640

    So, We get the value of Principal amount i.e initial investment = $61640

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