Question

how much must you deposit in an account that pays 8% annual interest compounded monthly to have a balance of $1,000 after one year​

Answer 1

`\$923.36`

Explanation:

we know that

The compound interest formula is equal to

`A=P(1+(r)/(n))^(nt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=1\ year\\ A=\$1,000\\ r=0.08\\n=12`

substitute in the formula above and solve for P

`\$1,000=P(1+(0.08)/(12))^(12*1)`

`P=\$1,000/(1+(0.08)/(12))^(12*1)=\$923.36`