Question

If you need $3,000 four years from now, how much would you need to deposit into an account that earns 5% interest, compounded annually? $_____

Answer 1

Answer:

2468.11 dollars

Step-by-step explanation:

Amount that should be available after four years =3000 $

Interest rate = 5%

No of years =4

Let P be the principal invested

Then $3000=P(1+0.05)^4\\P=3000(1.05)^{-4} \\=2468.11$

Hence 2468.11 dollars should be deposited to get 3000 dollars after 4 years at 5% interest.