# SOLUTION: How much principal should you invest at 4% in order to have \$3,000 for a vacation to Europe in 3 years? Someone told me to use 3,000/1.125 because this is a logarithm problem, b

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 Click here to see ALL problems on Miscellaneous Word Problems Question 196040: How much principal should you invest at 4% in order to have \$3,000 for a vacation to Europe in 3 years? Someone told me to use 3,000/1.125 because this is a logarithm problem, but I don't understand how I get the 1.125. Thank you for your help. Answer by ankor@dixie-net.com(15746)   (Show Source): You can put this solution on YOUR website!How much principal should you invest at 4% in order to have \$3,000 for a vacation to Europe in 3 years? : thats essentially what you are doing, here's how that came about: : Use the compound interest formula which pretty simple since it is compounded yearly : P*(1+r)^t = A Where P = the principal r = interest rate (.04) A = Accumulated amt (3000) t = time (3 yrs) : P*(1.04)^3 = 3000; find 1.04^3 on your calc, you don't need logs : P*1.124864 = 3000; (they rounded it to 1.125) ; P = P = \$2,666.99 invested to increase to 3000 after 3 yrs ; ; Check on a calc: enter 2666.99(1.04^3) = 3000