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How much money should be invested in an account that earns 7% interest compounded quarterly to yield $10,000 in 3 years. Round to the nearest cent

User Kyle Decot
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1 Answer

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\$8,120.58

1) We can tackle this question by inserting the data into the formula below, for interest compounded quarterly.


A=P(1+(r)/(n))^(nt)

2) So we can do this:


\begin{gathered} 10000=P(1+(0.07)/(4))^(4\cdot3) \\ 10000=P(1.0175)^(12) \\ P\left(1.0175\right)^(12)=10000 \\ (P\cdot\:1.0175^(12))/(1.23143)=(10000)/(1.23143) \\ P=8120.58 \\ \end{gathered}

Thus, $8,120.58 should be invested.

User Kelsi
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