SOLUTION: How much would you need to deposit into an account in order to save $2000 in the account in 10 years? Assume the account earns 8% interest compounded monthly.

Question 1175452: How much would you need to deposit into an account in order to save $2000 in the account in 10 years? Assume the account earns 8% interest compounded monthly.
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
using the calculator at , you would make the following inputs.

pv = 0
fv = 2000
np = 10 years * 12 months per year = 120 months.
pmt = 0
ir = 8% per year / 12 months per year = .666666666666 per month.
payment at beginning or end doesn't matter because there are no payments each time period so leave it as is.

click on pv and the calculator tells you that you need to invest 901.05 at the beginning of the investment period so that you can have 2000 at the end of the investment period.

a display of the results from using that calculator are shown below:

pv is negative because fv is positive.
if you entered fv as negative, then pv would have been negative.
the purpose for entering fv as positive is because that is money coming in to you.
the purpose for pv being shown as negative is because it is money going out from you.

you enter ir as .6666666666666, but the display will show that as rounded to 6 decimal digits, even though the full entry is used in the calculations.

the future value shown is rounded to the nearest penny.

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