Question

How much principal, to the nearest dollar, should you invest at 4% in order to have $3,000 for a vacation to Europe in 3 years?

Answer 1

T's going to make a difference whether that 4 percent is compounded more 
than once a year. 

We'll do the calculation assuming it's compounded only once a year, and if it 
turns out to be compounded more often than that, then the calculation will 
come out on the low side, and you'll wind up with a little bit more than $3,000. 

P times (1.04)3 = $3,000 

P = 3,000/(1.04)3 = $2,666.980769 or $2,667