Problema Solution
Charlie wants to make a one-time investment in an account that earns 4% interesting compounded monthly. To earn 221,791 dollars after 25 years, how much money must he invest?
Answer provided by our tutors
r = 0.04 or 4% annual rate
I = $221,791
t = 25 years
n = 12*25
n = 300
A = P (1+ r/12)^n
I = A - P
P(1 + r/12)^n - P = I
P(1+ 0.04/12)^300 - P = 221791
P*2.3122 = 221791
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click here to see the equation solved for P
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P = $95,922.07
Charlie must invest $95,922.07.