SOLUTION: What must be invested today, to be worth $20,000 in 10 years, if it is compounded yearly at 8%?

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Question 887914: What must be invested today, to be worth $20,000 in 10 years, if it is compounded yearly at 8%?
Answer by jim_thompson5910(35256) About Me  (Show Source):
You can put this solution on YOUR website!
What must be invested today, to be worth $20,000 in 10 years, if it is compounded yearly at 8%?
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Given:

A = $20,000
P = unknown (we're solving for this)
r = 8% = 0.08
n = 1 (compounding the money once per year)
t = 10

Plug these values into the equation below and solve for P

A+=+P%2A%281%2Br%2Fn%29%5E%28n%2At%29

20000+=+P%2A%281%2B0.08%2F1%29%5E%281%2A10%29

20000+=+P%2A%281.08%29%5E%2810%29

20000+=+P%2A2.158924997

20000%2F2.158924997+=+P

9263.8697628642+=+P

P+=+9263.8697628642

P+=+9263.87 Rounding to two decimal places (to the nearest cent)

You must invest $9,263.87