Question

Adam wishes to have $16,000 available in 18 yrs to purchase a new car for his son. To accomplish this goal, how much should adam invest now in a CD that pays 1.24% interest compounded monthly?

Answer 1

To accomplish this goal, how much should adam invest now $12800.7525 in a CD that pays 1.24% interest compounded monthly.

Explanation:

Amount = 16000

Time = 18 years

Interest = 1.24% interest compounded monthly

So, Formula :
`A=P(1+(r)/(n))^(nt)`

Formula :
`16000=P(1+(1.24)/(100 * 12))^(12 * 18)`

`16000=P(1.24992651224)`

`(16000)/(1.24992651224)=P`

`12800.7525=P`

Hence To accomplish this goal, how much should adam invest now $12800.7525 in a CD that pays 1.24% interest compounded monthly.