Question

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 8% interest compounded monthly.

Answer 1

P = $1341.53

Explanation:

A(t) = amount in t years

P = Principal (original investment)

r = annual interest rate (in decimal form)

n = number of times that interest is compounded each year

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

Substitute in the given values: 2000 = P(1 + 0.04/12)12(10)

2000 = P(1.490832682)

P = $1341.53