Question

Jane wishes to have 20,000 available at the end of 10 years so she deposit money into an account that pays 1.14% compounded monthly how much does she need to deposit in order to meet this goal?

Answer 1

Answer:

$\ 17,846.12$  

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  

$t=10\ years\\ A=\ 20,000\\ r=0.0114\\n=12$  

substitute in the formula above  

$\ 20,000=P(1+\frac{0.0114}{12})^{12*10}$  

$P=\ 20,000/[(1+\frac{0.0114}{12})^{120}]$  

$P=\ 17,846.12$