Question

How much money should be deposited today in an account that earns 4% compounded monthly so that it will accumulate to $8000 in three years? The amount of money that should be deposited is $ 1. (Round up to the nearest cent.)

Answer 1

Answer: $7105.27

Explanation:

Given : The Principal amount : P= $8000

Rate of interest : r=4% = 0.04

Time : t= 3 years

The formula to find the compound amount compounded monthly is given by :-

`A=P(1+(r)/(12))^(12t)`

i.e.
`8000=P(1+(0.04)/(12))^(12*3)`

i.e.
`8000=P(1.12592442594)`

i.e.
`P=(8000)/(1.12592442594)`

i.e.
`P=7105.27262371\approx7105.27`

Hence, the amount of money that should be deposited is $ 7105.27