ALegbra

If an apartment complex will need painting in 3 1/2 years and the job will cost $25,000, what amount needs to be deposited into an account now in order to have the necessary funds? The account pays 8% interest compounded semiannually.

(a) State the type of the problem.
future value
present value
ordinary annuity
amortization
sinking fund (I think it may be this one
(b) Answer the question. (Round to the nearest cent.)

Thank you

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  1. The compound interest formula is

    A = P * [1 + (r/n)]^(n * t)

    P = principal amount (the initial amount you borrow or deposit)
    r = annual rate of interest (as a decimal)
    t = number of years the amount is deposited or borrowed for.
    A = amount of money accumulated after n years, including interest.
    n = number of times the interest is compounded per year

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    posted by Jessie
  2. -----------------
    In this case you're trying to find P, the amount that needs to be deposited now.

    P = principal amount (the initial amount you borrow or deposit)
    r = 0.07
    t = 3.5
    A = 25,000
    n = 2

    ---------------------
    Rearranging the equation to solve for P gives

    P = { A / [1 + (r/n)]^(n * t) }

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    posted by Jessie
  3. It wouldn't let me post it all together so i posted it in two.

    This isn't my work I got it from YA! :D

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    posted by Jessie
  4. Oh wait the percent is wrong!!
    Follow his steps just use your numbers i guess so sorry didn't notice that!

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    posted by Jessie

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