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Popular Word Problems >

Evan is going to invest in an account paying an interest rate of 4.4% compounded monthly. How much would Evan need to invest, to the nearest dollar, for the value of the account to reach 41,000 in 8 years?

Solution

E v an i s g o in g t o in v es t in an a cco u n t p a y in g an in t eres t r a t e o f 4.4% co m p o u n d e d m o n t h l y . Ho w m u c h w o u l d E v an n ee d t o in v es t, t o t h e n e a res t d o ll a r, f or t h e v a l u e o f t h e a cco u n t t o re a c h 41, 000 in 8 ye a rs ?

Solution

Principal : 28853.05

Solution steps

Translate the problem into an equation:

41000 = P (1 + \frac{0.044}{12})^{12 \cdot 8}

Solve for

P, 41000 = P (1 + \frac{0.044}{12})^{12 \cdot 8} : P = 28853.05

Principal : 28853.05

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