Question

how much must you deposit in an account that pays 8% interest,compounded monthly to have a balance of $1000 after three years?​

Answer 1

Answer:  787.25 dollars

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Work Shown:

A = final amount after t years = 1000

P = initial deposit = unknown

r = interest rate in decimal form = 0.08

n = compounding frequency = 12

t = number of years = 3

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A = P*(1+r/n)^(n*t) is the compound interest formula

1000 = P*(1+0.08/12)^(12*3)

1000 = P*1.27023705162066

1.27023705162066P = 1000

P = 1000/1.27023705162066

P = 787.254629932364

P = 787.25 rounding to the nearest penny

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note: this assumes that the interest rate stays at 8% the entire three year period; also, you cannot withdraw any money from the account during this time period.