Ian is going to invest in an account paying an interest rate of 5.6% compounded monthly. How much would Ian need to invest, to the nearest ten dollars, for the value of the account to reach 21,400 in 19 years?

Solution

Ian is going to invest in an account paying an interest rate of 5.6% compounded monthly. How much would Ian need to invest, to the nearest ten dollars, for the value of the account to reach 21, 400 in 19 years?

Solution

Principal : 7402.86

Solution steps

Translate the problem into an equation:

21400 = P (1 + \frac{0.056}{12})^{12 \cdot 19}

Solve for

P, 21400 = P (1 + \frac{0.056}{12})^{12 \cdot 19} : P = 7402.86

Principal : 7402.86

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