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Popular Word Problems >

You have a bank account that has a 6% interest rate and is compounded semiannually. How much should you deposit today to have $6000 in the account in 5 years with no withdrawal? Round to the nearest cent.

Solution

Solution

Principal : 4464.56

Solution steps

Translate the problem into an equation:

6000 = P (1 + \frac{0.06}{2})^{2 \cdot 5}

Solve for

P, 6000 = P (1 + \frac{0.06}{2})^{2 \cdot 5} : P = 4464.56

Principal : 4464.56

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