Question

Khloe is going to invest in an account paying an interest rate of 7% compounded quarterly. How much would Khloe need to invest, to the nearest cent, for the value of the account to reach $340,000 in 19 years?

Answer 1

$90,962.66

Explanation:

The formula for this is, where V = amount after t years:

V = P(1 + r/n)^nt where P is the amount invested, r = the rate as a decimal fraction, n is the number of times interest compounded each year and t = the number of years.

Here, V = 340,000, r = 0.07, n = 4 , t = 19 and P is to be found.

340,000 = P(1 + 0.07/4)^(4*19)

340,000 = P( 1.0175)^76

P = 340,000 / (1.0175^76)

P = $90,962.66