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Popular Word Problems >

find the present value that will grow to \$4000 if the annual interest rate is 3.5% compound quarterly for 10 years.

Solution

solve for

t h e p rese n t v a l u e t ha t w i ll g ro w t o $4000 i f t h e ann u a l in t eres t r a t e i s 3.5% co m p o u n d q u a r t er l y f or 10 ye a rs .

Solution

Principal : 2823.05

Solution steps

Translate the problem into an equation:

4000 = P (1 + \frac{0.035}{4})^{4 \cdot 10}

Solve for

P, 4000 = P (1 + \frac{0.035}{4})^{4 \cdot 10} : P = 2823.05

Principal : 2823.05

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