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How much would you need to deposit in an account now in order to have 5000 in the account in 15 years? Assume the account earns 2% interest compounded monthly. Round to the nearest cent.

Solution

Solution

Principal : 3705.02

Solution steps

Translate the problem into an equation:

5000 = P (1 + \frac{0.02}{12})^{12 \cdot 15}

Solve for

P, 5000 = P (1 + \frac{0.02}{12})^{12 \cdot 15} : P = 3705.02

Principal : 3705.02

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