Question

Alex wants to have $2,500 in his bank account after 2 years. If the account earns 5% interest compunded 2 times per year, how much should he put in?

Answer 1

$A=P(1+ \frac{r}{n})^{nt}$
A=futurer amount
P=present amount
r=rate in decimal
n=number of times compounded per year
t=time in years

A=2500
r=0.05
n=2
t=2

$2500=P(1+ \frac{0.05}{2})^{(2)(2)}$
$2500=P(1+ 0.025)^{4}$
$2500=P(1.025)^{4}$
$2500=P(1.025)^{4}$
divide both sides by [tex} 1.025^{4} [/tex]
2264.88=P

he should invest
$2264.88