How much would you have to
deposit today to end up with
$1000 in 10 years if yearly
interest is 6% compounded
quarterly?

The principal sum to be deposited is $ 551.26

Solution:

Given that,

Amount after 10 years = $ 1000

Rate of Interest = 6 % compounded quarterly

Number of years = 10 years

Principal = ?

The formula for compound interest, including principal sum, is:

Where,

A = the future value of the investment/loan, including interest

P = the principal investment amount (the initial deposit or loan amount)

r = the annual interest rate (decimal)

n = the number of times that interest is compounded per unit t

t = the time the money is invested or borrowed for

Since interest is compounded quarterly, n = 4

Substituting the values in formula,

Thus the principal sum to be invested is $ 551.26

step-by-step explanation: