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What lump sum must be invested at 9%, compounded monthly, for the investment to grow to $72,000 in 6 years?

User Pabigot
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1 Answer

2 votes

Answer: $42042.50

Explanation:

We need to use algebra and equations.

A = P x (1 + (R/n)/100)^nt

our amount (A) is $72K

the number of times we compound the money (n) is 12 (12 months in a year, 'compounded monthly')

our rate (R) is 9 (9%)

our time (t) is 6 (6 years)

we need to find our principal/initial amount (p)

72000 = p x (1 + 0.0075)^12x6

p = $42042.50

User Kevinmrohr
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