Question

$3000 in five years. 4% intrest compounded 4 times a year . how much money should Tracy deposit?

Answer 1

Tracy should deposit 1,369.86 to earn 3,000 in 5 years at 4% interest rate compounded 4 times a year

Given:
Compounded Interest = 3000
Term = 5 year
Frequency = 4 times a year
interest rate = 4%
Principal = unknown. 


C.I = Principal × (1 + rate)^t
3000 = Principal × (1.04⁴)⁵
3000 = Principal × 1.17⁵
3000 = Principal x 2.19
3000/2.19 = Principal
1,369.86 = Principal

Answer 2

Going by the attached formula:
(where 'n' is the number of compounding periods per year)
Principal = Total / (1 + rate / n)^ n*years
Principal = 3,000 / (1 + .04 / 4) ^ 4 * 5
Principal = 3,000 / (1.01) ^ 20
Principal = 3,000 / 1.2201900399
Principal = 2,458.63