Question

What amount of money must you invest at 6.8% compounded monthly, in order to have $10,000 after 10 years? Round your answer to the nearest dollar.

Answer 1

The amount of money which is invested at 6.8% compounded monthly, in order to have $10,000 after 10 year is $5076.

What is compound interest?

Compound interest is the amount charged on the principal amount and the accumulated interest with a fixed rate of interest for a time period.

The formula for the final amount with the compound interest formula can be given as,

$A=P\times\left(1+\dfrac{r}{n\times100}\right)^{nt}$

Here, A is the final amount (principal plus interest amount) on the principal amount P of with the rate r of in the time period of t.

The rate of interest is 6.8% on the amount which is compounded monthly

The value of final amount is $10,000 after the time period of 10 years. There are total 12 months a year. Thus, the value of principal amount using the above formula is,

$10000=P\times\left(1+\dfrac{6.8}{12\times100}\right)^{12\times10}\\10000=P\times1.97\\P=\dfrac{10000}{1.97}\\P=5076.14\\P\approx5076$

Thus, the amount of money which is invested at 6.8% compounded monthly, in order to have $10,000 after 10 year is $5076.

Learn more about the compound interest here;

brainly.com/question/24274034

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