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Marques is going to invest in an account paying an interest rate of 2% compounded

daily. How much would Marques need to invest, to the nearest dollar, for the value of
the account to reach $28,000 in 6 years?

1 Answer

1 vote
We can use the formula for compound interest to solve this problem: A = P * (1 + r/n)^(n*t), where A is the final amount, P is the principal amount, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the time in years.

In this case, we have:

A = $28,000
r = 2% = 0.02
n = 365 (since interest is compounded daily)
t = 6

We want to solve for P. Substituting the given values into the formula, we get:

$28,000 = P * (1 + 0.02/365)^(365*6)

Dividing both sides by (1 + 0.02/365)^(365*6), we get:

P = $28,000 / (1 + 0.02/365)^(365*6) = $22,406.57

Therefore, Marques would need to invest $22,407 (rounded to the nearest dollar) for the value of the account to reach $28,000 in 6 years.
User Benjith Mathew
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