Find the amount that results from the given investment

Question

To get $600 after 3 years at 10% compounded monthly. The present value of $600 is $__?

Answer 1

A = P(1 + r/n)^nt  is the compound interest formula

 

A = future or final amount = $600

P = Principal investment = unknown

r = interest rate as a decimal = .1

n = number of times compounded each year = 12

t = time in years = 3

 

600 = P(1 + .1/12)¹²⁽³⁾

 

P = 600/(1+.1/12)³⁶

P = $445.04

 

To get $600 after 3 years at 10% interest compounded monthly

we had to invest $445.04 principal