Rashon is going to invest in an account paying an interest rate of 6.9% compounded quarterly. How much would Rashon need to invest, to the nearest dollar, for the value of the account to reach 20,200 in 13 years?

Solution

R a s h o n 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 6.9% co m p o u n d e d q u a r t er l y . Ho w m u c h w o u l d R a s h o n 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 20, 200 in 13 ye a rs ?

Principal : 8300.63

Solution steps

Translate the problem into an equation:

20200 = P (1 + \frac{0.069}{4})^{4 \cdot 13}

Solve for

P, 20200 = P (1 + \frac{0.069}{4})^{4 \cdot 13} : P = 8300.63

Principal : 8300.63