Problem

Find the principal $P$ that will generate the given future value $A$, where $A=\$ 10,000$ at $8 \%$ compounded daily for 9 years.
The principal $\mathrm{P}$ will be approximately $\$ \square$. (Round to two decimal places as needed.)

Answer

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Answer

Final Answer: The principal P will be approximately \(\boxed{\$4867.91}\)

Steps

Step 1 :We are given a future value (A) of $10,000, an annual interest rate (r) of 8%, the interest is compounded daily (n=365), and the time (t) is 9 years. We are asked to find the principal (P) that will generate this future value.

Step 2 :The formula for compound interest is given by: \[A = P(1 + \frac{r}{n})^{nt}\]

Step 3 :We can rearrange the formula to solve for P: \[P = \frac{A}{(1 + \frac{r}{n})^{nt}}\]

Step 4 :Substitute the given values into the formula: A = 10000, r = 0.08, n = 365, t = 9.

Step 5 :Calculate the principal P: P = 4867.906586170056

Step 6 :Round the principal P to two decimal places: P = 4867.91

Step 7 :Final Answer: The principal P will be approximately \(\boxed{\$4867.91}\)

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