Question

Sadie is going to invest in an account paying an interest rate of 3.1% compoundedannually. How much would Sadie need to invest, to the nearest hundred dollars, forthe value of the account to reach $1,030 in 16 years?

Answer 1

Given data:

The final amount is A=$1030.

The given time is t=16 year.

The given rate of interest is r=3.1%.

The expression for the amount is,

$A=p(1+\frac{r}{100})^t$

Substitute the given values in the above expression.

$\begin{gathered} 1030=p(1+\frac{3.1}{100})^{16} \\ p=\frac{1030}{1.62981625} \\ =631.973 \\ \approx600 \end{gathered}$

Thus, the amount need to invest is $600.