Question

how much must be desosited today into the following accountsin order tohave 65000 in 7 years for a down payment on a house an account with annual compounding and anapr of 4 %​

Answer 1

$49,394.66

Explanation:

Use the compound amount formula:

A = P(1 + r)^t

Here A = $65,000; t = 7 years; and r = 0.04.

We want P, given A, r and t.

$65,000

P = ------------------- = $49,394.66

(1 + 0.04)^7

$49,394.66 will increase to $65,000 in 7 years with an interest rate of 4% compounded annually.