Alexandra wants to go on a cruise in three years. She could earn 8.2 percent interest compounded monthly in an account if she were to deposit the money today. She needs to have 10000 in three years. How much must she have to deposit today?

Solution

Solution

Principal : 7825.77

Solution steps

Translate the problem into an equation:

10000 = P (1 + \frac{0.082}{12})^{12 \cdot 3}

Solve for

P, 10000 = P (1 + \frac{0.082}{12})^{12 \cdot 3} : P = 7825.77

Principal : 7825.77

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