How much cash must be deposited in a savings account In Order To Accumulate 50,000 At End Of 7 Years With 12 % Interest Rate?
Amount = Principal(1+i)^n
50000 = Princ(1.12)^7
principal = 50000/(1.12)^7 = 22617.46
Thank you Reiny.
To calculate how much cash must be deposited in a savings account in order to accumulate $50,000 at the end of 7 years with a 12% interest rate, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value (amount to accumulate) = $50,000
P = the principal (initial deposit)
r = the annual interest rate = 12% = 0.12
n = the number of times interest is compounded per year (Assuming it is compounded annually)
t = the number of years = 7
We need to rearrange the formula to solve for P:
P = A / (1 + r/n)^(nt)
Substituting the values into the formula:
P = $50,000 / (1 + 0.12/1)^(1 * 7)
Simplifying the equation within the brackets:
P = $50,000 / (1.12)^7
Using a calculator or a computer program to calculate the expression within the brackets, we find:
P ≈ $20,799.6463 (rounded to the nearest dollar)
Therefore, approximately $20,799 must be deposited in the savings account to accumulate $50,000 at the end of 7 years with a 12% interest rate.