What should I invest now to have $15,000 in 12 years at a compounded monthly rate of 1.6%?
P(1+.016/4)^(4*12) = 15000
solve for P
Oops. Missed the monthly rate. Thought it was 1.6% annually, compounded quarterly. (How? no idea - careless reading)
P(1+.016)^(12*12) = 15000
To determine what you should invest now to have $15,000 in 12 years at a compounded monthly rate of 1.6%, you can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the present value (the amount you need to invest now)
r = the annual interest rate (1.6% in this case)
n = the number of times that interest is compounded per year (in this case, it's compounded monthly, so n = 12)
t = the number of years (12 in this case)
Rearranging the formula to solve for P, we have:
P = A / (1 + r/n)^(nt)
Substituting the given values into the formula:
A = $15,000
r = 1.6% = 0.016
n = 12
t = 12
P = $15,000 / (1 + 0.016/12)^(12*12)
Now we can calculate the value of P.