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How much would you need to deposit in an account now in order to have $3000
in the account in 10 years?
Assume the account earns 3% interest compounded monthly.
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Use the formula for discretely compounded account
f = p * (1 + r) ^ n
where f is the future value
p is the principal (the deposited amount)
r is the interest rate per time period, presented as a decimal
n is the number of time periods.
Your time periods are months.
f = 3000.
r = 0.03/12.
n = 10 years * 12 = 120 months.
Formula becomes 3000 = , which gives
p = = 2223.29 to the nearest cent. ANSWER
Solved.
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To see many other similar (and different) solved problems on compounded interest accounts, look into the lesson
- Compounded interest percentage problems
in this site.
Learn the subject from there.