SOLUTION: An investor needs $18000 in 20 years; a finance company is offering 6% compounded monthly. How much should they invest now?

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Question 997954: An investor needs $18000 in 20 years; a finance company is offering 6% compounded monthly. How much should they invest now?
Found 3 solutions by lwsshak3, MathTherapy, ikleyn:
Answer by lwsshak3(11628)   (Show Source):
You can put this solution on YOUR website!
An investor needs $18000 in 20 years; a finance company is offering 6% compounded monthly. How much should they invest now?
compound Interest formula: A=P(1+r/n)^nt, P=initial investment r=interest rate, n=number of compounding periods per year, A=amt after t- years
For given problem:
P=?
r=.6%
n=12
t=20
A=8000
8000=P(1+.06/12)^12*20
8000=P(1+.005)^240=P(1.005^240=3.3102
P=8000/3.3102=2416.77
How much should they invest now?$2416.77

Answer by MathTherapy(10837)   (Show Source):
You can put this solution on YOUR website!

An investor needs $18000 in 20 years; a finance company is offering 6% compounded monthly. How much should they invest now?

Amount to invest now:

Answer by ikleyn(53846)   (Show Source):
You can put this solution on YOUR website!
.
An investor needs $18000 in 20 years; a finance company is offering 6% compounded monthly.
How much should they invest now?
~~~~~~~~~~~~~~~~~~~~~~~~~

        In his post, @lwsshak3 incorrectly read the problem - so, his numbers in calculations are irrelevant
        to the problem and his answer is incorrect.

        I came to provide a correct solution.

compound interest formula: A = , where

P = initial investment
r = interest rate,
n = number of compounding periods per year,
A = amount after t years

For given problem:
P = ?
r = 0.06
n = 12
t = 20
A = 18000

18000 =

18000 = = .

P = = 5437.730549

How much should they invest now ? $5437.73 rounded to the closest cent.         ANSWER

Solved correctly.