Calculate the amount of money Gregory had to deposit in an investment fund growing at an interest rate of 2.50% compounded annually, to provide his daughter with 14,500 at the end of every year, for 3 years, throughout undergraduate studies.

Solution

C a l c u l a t e t h e am o u n t o f m o n ey G re g ory ha d t o d e p os i t in an in v es t m e n t f u n d g ro w in g a t an in t eres t r a t e o f 2.50% co m p o u n d e d ann u a ll y, t o p ro v i d e hi s d a ug h t er w i t h 14, 500 a t t h e e n d o f e v ery ye a r, f or 3 ye a rs, t h ro ug h o u t u n d er g r a d u a t e s t u d i es .

Interest : 1035.31

Solution steps

Translate the problem into an equation:

14500 = 13464.69145 \dots + I

Solve for

I, 14500 = 13464.69145 \dots + I : I = 1035.31

Interest : 1035.31