SOLUTION: how much money a student have to deposit today at an account that pays 6% compound quarterly in order that after 10 years she will have in her account 4000

Algebra ->  Customizable Word Problem Solvers  -> Finance -> SOLUTION: how much money a student have to deposit today at an account that pays 6% compound quarterly in order that after 10 years she will have in her account 4000      Log On

Ad: Over 600 Algebra Word Problems at edhelper.com


    

Question 612927: how much money a student have to deposit today at an account that pays 6% compound quarterly in order that after 10 years she will have in her account 4000
Answer by jim_thompson5910(35256) About Me  (Show Source):
You can put this solution on YOUR website!

A=P%281%2Br%2Fn%29%5E%28n%2At%29 Start with the compound interest formula


4000=P%281%2B0.06%2F4%29%5E%284%2A10%29 Plug in A=4000, r=0.06 (the decimal equivalent of 6%), n=4 and t=10.


4000=P%281%2B0.015%29%5E%284%2A10%29 Evaluate 0.06%2F4 to get 0.015


4000=P%281.015%29%5E%284%2A10%29 Add 1 to 0.015 to get 1.015


4000=P%281.015%29%5E%2840%29 Multiply 4 and 10 to get 40.


4000=P%281.81401840866894%29 Evaluate %281.015%29%5E%2840%29 to get 1.81401840866894.


4000%2F%281.81401840866894%29=P Divide both sides by 1.81401840866894 to isolate "P".


P=4000%2F%281.81401840866894%29 Rearrange the equation.


P=2205.04928774953 Divide.


P=2205.05 Round to the nearest hundredth (ie to the nearest penny).


So she should deposit 2205.05 dollars into the account.