Question

Lauren is going to invest in an account paying an interest rate of 3.4% compoundedannually. How much would Lauren need to invest, to the nearest cent, for the value ofthe account to reach $13,000 in 8 years?

Answer 1

Lets imagine that Lauren invested X, so in 8 years she need to have $13.000. Knowing that the interest is 3.4% a year we can find the expression:

$X\times(1+\frac{3.4}{100})^8=13000\rightarrow X\times1.034^8=13000\rightarrow X=\frac{13000}{1.30666}\rightarrow X=9949.03$

So, Lauren needs to invest $9949.03 to have in the end of 8 years $13000