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?	


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 {{{1.025^4= 1.025*1.025*1.025*1.025=1.103812891}}} to both sides of equation to isolate P.

{{{2000/1.103812891=P(1.025^4)/1.025^4=P}}}

Step 2.  P=$1811.90