Question

You find a mutual fund that offers approximately 5% APR compounded monthly. You will invest enough each month so that you will have $1000 at the end of the year. How much money will you have invested in total after one year?

Answer 1

977.38 -_- ..........

Answer 2

The amount you need to invest in a year is $951.3

Explanation:

Consider the provided information.

The future value can be calculated as:

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

Where, A represents future value, P represents Principal value, r represents interest rate in decimal, n represents number of time interest is compounded and t represents time in years.

Now use the above formula to find the money needed to invest i.e P.

Substitute, n = 12 , t = 1, A = 1000 and r = 5% or 0.05 in the above formula.

`1000=P(1+(0.05)/(12))^(12 * 1)`

`1000=P(1.00417)^(12)`

`1000=P(1.0512)`

`P=951.3`

Thus, the amount you need to invest in a year is $951.3