Question

Brittany will be working full time this summer to save for her goal of having $10,000 by the time she's 21. Brittany has an account that will pay

3.5% interest, compounded monthly. She'll turn 17 at the end of the summer. About how much will Brittany have to deposit at the end of the
summer so that her money can grow into $10,000 by the time she's 21?
A $8,663
B. $8,681
OC $8.695
D. $8,720

Answer 1

8,695

Explanation:

Answer 2

8,695

Explanation:

The formula for compound interest is :

Money = C * (1+r)^n

Where

C is the money invested

r is the interest

n is the periods you are investing

Money is the money you will have at the end of the period

In this problem C is what you need to find, the interest is 3.5% (anually) and since it is compounded monthly you have to divide it by 12 months to know exactly the interest of each month:

3.5/12 = 0.2917

The number of periods invested is 4 years, and because the interest is monthly the exact number of periods is 48 ( 4* 12 )

Replacing and solving:

10000 = C * (1+0.002917)^48

C = 8,695