Question

Hsu-Mei wants to save $3,000 for a down payment on a car. To the nearest dollar, how much will she need to invest in an account now with 7.4% APR, compounded daily, in order to reach her goal in 3 years?

Answer 1

Given,

The ampunt needs for down payment is $3000.

The rate of interest is 7.4%.

The time period is 3 years.

Required

The amount need to be deposite.

Consider,

The amount deposite in the account is x.

The amount for compounded daily is calculated as,

$\begin{gathered} A=Pe^{rt} \\ 3000=xe^{0.074\times3} \\ 3000=xe^{0.222} \\ x=\frac{3000}{e^{^{0.222}}} \\ x=2402.75 \\ x=2403 \end{gathered}$

Hence, the amount to be deposite is $2403.