Final answer:
To pay for Chelsea's rent for the next three years, Chelsea's dad should invest approximately $24,267.18 in a savings account today.
Step-by-step explanation:
To calculate the amount Chelsea's dad should invest today to pay for her rent for the next three years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where A is the future value, P is the principal investment, r is the annual interest rate, n is the number of times the interest is compounded per year, and t is the number of years.
In this case, the future value is $700 * 36 (since she will pay $700 each month for 36 months), the interest rate is 2.81%, and the interest is compounded monthly (so n = 12).
Let's plug these values into the formula:
P = 700 * 36 / (1 + (2.81/100)/12)^(12*3)
Using a calculator, P simplifies to approximately $24,267.18. Therefore, Chelsea's dad should invest around $24,267.18 in a savings account today to be able to pay for her rent for the next three years.