SOLUTION: How much would you need to deposit in an account now in order to have $6000 in the account in 5 years? Assume the account earns 3% interest compounded monthly.

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Question 1195157: How much would you need to deposit in an account now in order to have $6000 in the account in 5 years? Assume the account earns 3% interest compounded monthly.
Answer by josgarithmetic(39620) About Me  (Show Source):
You can put this solution on YOUR website!
N%2A%281.03%29%5E5=6000-----if for annually


MONTHLY,
12%2A5=60 months
and monthly rate would be 3%2F12=0.25

N%2A%281.0025%29%5E60=6000
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N, amount to invest now today
0.03, yearly interest rate
1%2Ayear=12%2Amonths
5, how many years the N amount will be invested

The number of monthly compounding periods is 5years%2A12%28months%2Fyear%29=60%2Amonths.

What is monthly interest rate? 0.03%2F12=0.0025.

If N were invested for just one year, then BALANCE would be N%2A1.0025%5E12; but your example is for 60 months or nearly enough to 60 compounding periods.