Question

To help with her retirement savings, Donna has decided to invest. Assuming an interest rate of 3.59% compounded quarterly, how much would she have to invest to have $117,300 after 18 years?

Answer 1

Answer:

We get the value of Principal amount i.e initial investment = $61640

Step-by-step explanation:

Interest rate r = 3.59% or 0.0359

Compounded quarterly n = 4

Future Amount A = 117,300

Time t = 18 years

We need to find initial investment i,e Principal Amount P

The formula used is: $A=P(1+\frac{r}{n})^{nt}$

Putting values and finding P

$A=P(1+\frac{r}{n})^{nt}\\117300=P(1+\frac{0.0359}{4})^{4*18} \\117300=P(1+0.008975)^{72}\\117300=P(1.008975)^{72}\\117300=P(1.903)\\P=\frac{117300}{1.903}\\P=61640$

So, We get the value of Principal amount i.e initial investment = $61640