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Orion would like to go on a trip to Ireland in two years. He wants to have $3,000 for the trip, so he is planning to invest money into an account with an 8% compounding interest rate. How much will Orion need to invest right now in order to attain his goal in two years?

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jepessoa

Answer:

The answer is: If Orion wants to have $3,000 in two years, he must invest $2,572.02 today

Explanation:

To determine how much money Orion has to invest today in order to have $3,000 in two years, considering he will get an 8% compound interest rate, we can use this formula:

P = FV / (1 + r)²    

Where:

  • FV = $3,000
  • r = 8%

P = $3,000 / (1 + 8%)²

P = $3,000 / 1.1664

P = $2,572.02

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