Question

What principal will amount to $3500 if invested at 4% interest compounded quarterly for 5 years

Answer 1

Given

The Amount is $3500.

The rate of interest is 4%.

The time taken is 5 years.

To find the principal.

Step-by-step explanation:

The amount that has to be compounded quarterly for 5 years is given by,

`A=P(1+(1)/(4)*(r)/(100))^(4t)`

That implies, for A=$3500, r=4, t=5,

`\begin{gathered} 3500=P(1+(1)/(4)*(4)/(100))^(4*5) \\ 3500=P(1+0.01)^(20) \\ 3500=P(1.01)^(20) \\ P(1.22)=3500 \\ P=(3500)/(1.22) \\ P=2868.41 \end{gathered}`

Final result: Hence, the principal is $2868.41.