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How much would you need to deposit in an account now in order to have $2000 in the account in 15years? Assume the account earns 7% interest compounded monthly.

1 Answer

5 votes

Answer:

To calculate the amount you would need to deposit in the account now, we can use the formula for compound interest:

A = P(1 + r/n)^(nt)

where A is the amount you will have after 15 years, P is the principal amount (the amount you need to deposit now), r is the annual interest rate (7%), n is the number of times the interest is compounded per year (12 for monthly compounding), and t is the time in years (15).

Plugging in the values, we get:

2000 = P(1 + 0.07/12)^(12*15)

Simplifying the right side, we get:

2000 = P(1.00583)^180

Dividing both sides by (1.00583)^180, we get:

P = 2000 / (1.00583)^180

P = $775.80 (rounded to the nearest cent)

Therefore, to have $2000 in the account in 15 years with an annual interest rate of 7% compounded monthly, you would need to deposit $775.80 now.

answered
User Balint Domokos
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