Suppose you open a savings account today which will yield 7.85% interest. How much money should you deposit if you would like there to be \$6,000 in the account in 5 years, assuming the interest is compounded...

Solution

Suppose you open a savings account today which will yield 7.85% interest. How much money should you deposit if you would like there to be $6, 000 in the account in 5 years, assuming the interest is compounded...

Solution

Amount : 8754.92

Solution steps

Translate the problem into an equation:

A = 6000 (1 + \frac{0.0785}{1})^{1 \cdot 5}

6000 (1 + \frac{0.0785}{1})^{1 \cdot 5} = 8754.91628 \dots

Round to the nearest hundredth:

8754.92

Amount : 8754.92

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