I can invest money at 5.75% per annum. How much should I invest now to ensure that I have $5000 after 1 year?
P(1.0575) = 5000
solve for P
you didn't answer my question
To calculate the amount you should invest now to ensure a future value of $5000 after 1 year at an interest rate of 5.75% per annum, you can use the formula for compound interest:
Future Value = Present Value * (1 + Interest Rate)^Time
In this case:
- Future Value (FV) is $5000,
- Present Value (PV) is what we want to calculate,
- Interest Rate is 5.75% per annum, which is equivalent to 0.0575 (in decimal form),
- Time is 1 year.
Substituting these values into the formula, we have:
$5000 = PV * (1 + 0.0575)^1
Now, we can solve for PV:
PV = $5000 / (1 + 0.0575)^1
PV ≈ $4,732.06
Therefore, you should invest approximately $4,732.06 now to ensure that you have $5000 after 1 year at an annual interest rate of 5.75%.