Annual Interest Rate

Question

 In 8 months, Alex will need $1,430.00 to pay her college tuition. How much does she need to invest today into an account earning an an interest rate of 7.716% compounded monthly, so that she has enough money to pay her tuition?

Answer 1

A= P(1+r/n)^nt where n=number of compounding periods per year = 12 for monthly compounding

t=years= 8/12, r=annual interest rate =7.716%= 0.07716, , A=ending Amount= $1430, P = initial investment

1430 = P(1+.07716/12)^(12(8/12)

solve for P

use a calculator

=about $1,358.52 rounded off to nearest cent