Question

Ian and April wish to have 8,000 available for the wedding in six years how much money should be set aside now at 6% compounded monthly in order to reach their financial goal

Answer 1

Answer:

$\ 5,586.42$  

Step-by-step explanation:

we know that    

The compound interest formula is equal to  

$A=P(1+\frac{r}{n})^{nt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest  in decimal

t is Number of Time Periods  

n is the number of times interest is compounded per year

in this problem we have  

$t=6\ years\\ A=\ 8,000\\ r=0.06\\n=12$  

substitute in the formula above  

$8,000=P(1+\frac{0.06}{12})^{12*6}$  

$8,000=P(1.005)^{72}$  

$P=8,000/(1.005)^{72}$  

$P=\ 5,586.42$