Question

How much principle, to the nearest dollar, should you invest at 4 percent in order to have $3000 for a vacation to Europe in 3 years

Answer 1

Principle should be $2,667

Explanation:

We need $3000 for a vacation to Europe in 3 years.

Using amount formula,

`A=P(1+r)^t`

Where, P is principle (P=?)

A is amount (A=3000)

r is rate of interest (r=0.04)

t is time (t=3)

Substitute the values into formula and solve for P

`3000=P(1+0.04)^3`

`3000=P(1.04)^3`

`P=(3000)/(1.04^3)`

`P=2666.98`

`P\approx \$2667`

Hence, Principle should be $2,667