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Trevor is saving for a down payment to buy a house. The account earns 11.2% interest compounded monthly, and he wants to have $14,000 in 7 years. What must his principal be

Respuesta :

Answer:

the principal amount is $6,415.35

Explanation:

The computation of the principal amount is given below:

Amount = Principal × (1 + rate of interest)^time period

$14,000 = Principal × (1 + 11.2% ÷ 12)^7× 12

$14,000 = Principal × (1.00933)^84

So, the principal is

= $14,000 ÷ 2.18227

= $6,415.35

hence, the principal amount is $6,415.35

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