Question

Suppose that you can invest your money at an annual interest rate of 8%, compounded quarterly. How much should you invest today so that it will be worth $8000 in 6 years? 

Answer 1

$A=P(1 + {r \over n})^{nt}$

P: the principal, amount invested

A: the new balance

t: the time

r: the rate, (in decimal form)

n: the number of times it is compounded

P=? r=8% n=4 t=8 A=$8000

$8000=P(1 + {0.08 \over 4})^{4×8}$

P=$4245.066