SOLUTION: how much would you need to deposit in an account now in order to have $4,000.00 in the account in 5 years? Assume the account earns 3% interest compound monthly.

Question 326637: how much would you need to deposit in an account now in order to have $4,000.00 in the account in 5 years? Assume the account earns 3% interest compound monthly.
Answer by galactus(183) (Show Source): You can put this solution on YOUR website!
The interest formula is

Now, in this case, we want to end up with 4,000. We are given n, r, and A.
We have to solve for P, the initial amount invested.
n=the number of times compounded in a year. In this case, n=12
r=.03
A=4000

We would have to invest 3443.48 in order to get 4000 at the end of 5 years at 3% interest compounded monthly.
If you encounter subsequent problems of this nature, look at what you're given and sub them into the formula, then solve for the unknown.

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