Question

You have a goal of accumulating $500,000 in an account 30 years from now. If the account earns 9% per year, how much would you have to deposit now to grow to the desired goal?

N= I/Y= PV= PMT= FV= P/Y=

Answer 1

$37685.56

Explanation:

Given,

Total amount we want to accumulate,A = $500,000

Total time, we have,t = 30 years

Interest rate,r = 9%

We are asked to calculate how much money we should deposit to get the required amount after a certain time period.

So, according to compound interest formula,

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

Where, P = amount of money we need to deposit

`=>\ 500,000\ =\ P(1+0.09)^(30)`

`=>\ 500,000\ =\ P(1.09)^(30)`

`=>\ 500,000\ =\ P* 13.267`

`=>\ (500,000)/(13.267)\ =\ P`

`=>\ P\ =\ 37685.568`

So, we need to deposit total amount of $37,685.56.