How much would you need to deposit in an account now in order to have $6000 in the account in 10 years?
Assume the account earns 2% interest compounded monthly.
Answer pls!!
To calculate the amount you need to deposit now to have $6000 in the account in 10 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = The future value of the account ($6000 in this case)
P = The principal amount (the initial deposit we are trying to find)
r = The annual interest rate (2% in this case, expressed as a decimal: 0.02)
n = The number of times the interest is compounded per year (monthly compounding, so n = 12)
t = The number of years the money is invested for (10 years in this case)
Now, let's plug in the values into the formula and solve for P:
$6000 = P(1 + 0.02/12)^(12*10)
To solve this equation, we can divide both sides by (1 + 0.02/12)^(12*10) to isolate P:
P = $6000 / (1 + 0.02/12)^(12*10)
Calculating this on a calculator or using a spreadsheet, we find that the principal amount you would need to deposit now is approximately $4,458.60.
Therefore, you would need to deposit around $4,458.60 in the account now to have $6000 in the account in 10 years, assuming an annual interest rate of 2% compounded monthly.