We can use the formula for compound interest to solve this problem:
A = P(1 + r/n)^(nt)
where:
A = the amount of money Mia will have after 3 years
P = the amount of money she needs to invest now
r = the annual interest rate (as a decimal)
n = the number of times the interest is compounded per year
t = the number of years
We know that A = $8,000, r = 0.074 (7.4% as a decimal), n = 365 (compounded daily), and t = 3. We can solve for P:
P = A / (1 + r/n)^(nt)
P = $8,000 / (1 + 0.074/365)^(365*3)
P = $6,437.67
Therefore, Mia will need to invest $6,437.67 in an account with 7.4% APR, compounded daily, in order to reach her goal of $8,000 in 3 years.
Mia wants to save $8,000 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?
1 answer