Problema Solution
A company will need $65,000 in 6 years for an addition. To meet this goal, the company deposits money in an account today that pays 6% annual interest compound quarterly. Find the amount that should be invested to total $65,000 in 6 years.
The company should invest $_______.
(round to the nearest dollar as needed)
Answer provided by our tutors
Money needed = $65000
Time = 6 yrs
Intrest Rate= 6% pe year/annum
let 'X' be the amount deposited by the company
[X+X*(6/100)]+[X+(X+X*6/100)*6/100]+........
it can be also written as
FORMULA:
compound interest is
Where,
A = final amount
P = principal amount (initial investment)
r = annual nominal interest rate (as a decimal, not in percentage)
n = number of times the interest is compounded per year
t = number of years
here
r=0.06
n=1
P=X
t=6
A=$65000
65000=X{1+0.06/1}6
65000=X(1.48)
X=65000/1.48
X=43918.91
X= $43919.