Question

How much would you need to deposit in an account now in order to have $2000 in the account in 10 years? Assume the account earns 4% simple interest. Round your answer to the nearest cent.

Answer 1

The formula for simple interest is:

I = Prt

where I is the interest earned, P is the principal (the initial amount deposited), r is the interest rate, and t is the time in years.

We want to find the amount of money that needs to be deposited now (P) in order to have $2000 in the account after 10 years, so we can use the formula to solve for P:

I = Prt

2000 = P * 0.04 * 10

2000 = 0.4P

P = 5000

Therefore, $5000 needs to be deposited now in order to have $2000 in the account in 10 years at a 4% simple interest rate.

*IG : whis.sama_ent*