Question

How much money would need to be deposited into an account earning 5.75% interest compounded annually in order for the accumulated value at the end of 25 years to be $85,000?

Answer 1

I will assume you are using compound interest. 

let the amount invested be x 

x(1.0575)^25 = 85000 
x = 85000/1.0575^25 = $21,009.20

Answer 2

Answer:

The money that would need to be deposit into the account is $21009.44

Step-by-step explanation:

Given:  Interest = 5.75% compounded annually

Amount = $ 85,000

Times period = 25 years

We have to calculate the money that would need to be deposit into the account.

We know the formula for compound interest

$A=P(1+\frac{r}{100})^n$

Where, A is amount

P is principal amount

n is time

r = rate of interest

Thus, Substitute, we get,

$85000=P(1+\frac{5.75}{100})^25$

Solving for P,

$\left(1+\frac{5.75}{100}\right)^{25}=4.0458(approx)$

Divide both side by 4.0458, we get,

$P=\frac{85000}{4.0458}=21009.44$

Thus, the money that would need to be deposit into the account is $21009.44