In 2 years, David wants to buy a bicycle that costs 600.00. If he opens a savings account that earns 4% interest compounded quarterly, how much will he have to deposit as principal to have enough money in 2 years to buy the bike?

Solución

I n 2 ye a rs, D a v i d w an t s t o b u y a bi cyc l e t ha t cos t s 600.00. I f h e o p e n s a s a v in g s a cco u n t t ha t e a r n s 4% in t eres t co m p o u n d e d q u a r t er l y, h o w m u c h w i ll h e ha v e t o d e p os i t a s p r in c i p a l t o ha v e e n o ug h m o n ey in 2 ye a rs t o b u y t h e bik e ?

Principal : 554.09

Pasos de solución

Translate the problem into an equation:

600 = P (1 + \frac{0.04}{4})^{4 \cdot 2}

Resolver para

P, 600 = P (1 + \frac{0.04}{4})^{4 \cdot 2} : P = 554.09

Principal : 554.09