SOLUTION: Debbie plans on investing enough money so that she will have $2000 at the end of two years. How much money will she have to invest now if her money will grow according to the follo

Question 212107: Debbie plans on investing enough money so that she will have $2000 at the end of two years. How much money will she have to invest now if her money will grow according to the following formula: 2000 = P (1.025)^4?
Answer by drj(1380) (Show Source): You can put this solution on YOUR website!
Debbie plans on investing enough money so that she will have $2000 at the end of two years. How much money will she have to invest now if her money will grow according to the following formula: 2000 = P (1.025)^4?

Step 1. Solve for P where P is the initial investment. Interest in this case is 2.5 % compounded semiannually since in this case it's compounded 4 times in 2 years
Divide by to both sides of equation to isolate P.

Step 2. P=$1811.90

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