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Hsu-Mei wants to save $6,000 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 :

Solution:

Suppose the invested amount is P;

Given that;

[tex]\begin{gathered} r=7.4\text{ \%}=0.074 \\ \\ rate\text{ }per\text{ }day=\frac{0.074}{365} \end{gathered}[/tex]

Also;

[tex]\begin{gathered} t=3years=3\times365day \\ \\ t=1095days; \\ \\ A=6000 \end{gathered}[/tex]

Thus;

[tex]\begin{gathered} 6000=P(1+\frac{0.074}{365})^{1095} \\ \\ P=4805.60 \end{gathered}[/tex]

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