Keilantra is saving money and plans on making quarterly contributions into an account earning an annual interest rate of 3.2% compounded quarterly. If Keilantra would like to end up with dollar sign, 61, comma, 00061, 000 after 6 years, how much does she need to contribute to the account every quarter, to the nearest dollar? Use the following formula to determine your answer.

Solution

Solution

Principal : 0.21

Solution steps

Translate the problem into an equation:

\frac{1}{4} = P (1 + \frac{0.032}{4})^{4 \cdot 6}

Solve for

P, \frac{1}{4} = P (1 + \frac{0.032}{4})^{4 \cdot 6} : P = 0.21

Principal : 0.21

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