Question

Determine the amount of money you need to invest to have $26,000 dollars in 3 years if you invest it at 2.5% annual interest,

compounded monthly.

Answer 1

$24123.20

Explanation:

Remember your compounded interest rate formula: A = P(1 + r/n)^nt

Step 1: Write in known variables

26000 = P(1 + 0.025/12)^36

Step 2: Solve for P

26000 = P(1.0778)

P = 26000/1.0778

P = 24123.2

And we have our final answer!