Question

How much money should you invest now in order to have $ 60 comma 000$60,000 in 2929 ?years? Assume that the money earns interest at 10.5 %10.5%?, compounded annually. Round to the nearest dollar amount.

Answer 1

$3316 should be invested.

Explanation:

Since, the amount formula in compound interest is,

`A=P(1+r)^t`

Where, P is the principal amount,

r is the rate per period,

t is the time in years,

Here,

A = $ 60,000,

r = 10.5% = 0.105

t = 29 years,

By substituting value,

`60000=P(1+0.105)^(29)`

`P=(60000)/(1.105^(29))=\$3316.23415377\approx \$3316`

Hence, $ 3316 should be invested.