Sophia is going to invest in an account paying an interest rate of 3.4% compounded monthly. How much would Sophia need to invest, to the nearest dollar, for the value of the account to reach 1,450 in 14 years?

Solution

Sophia is going to invest in an account paying an interest rate of 3.4% compounded monthly. How much would Sophia need to invest, to the nearest dollar, for the value of the account to reach 1, 450 in 14 years?

Solution

Principal : 901.44

Solution steps

Translate the problem into an equation:

1450 = P (1 + \frac{0.034}{12})^{12 \cdot 14}

Solve for

P, 1450 = P (1 + \frac{0.034}{12})^{12 \cdot 14} : P = 901.44

Principal : 901.44

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