Question

Ian and April wish to have 8,000 available for the wedding in six years how much money should be set aside now at 6% compounded monthly in order to reach their financial goal

Answer 1

`\$5,586.42`

Explanation:

we know that

The compound interest formula is equal to

`A=P(1+(r)/(n))^(nt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=6\ years\\ A=\$8,000\\ r=0.06\\n=12`

substitute in the formula above

`8,000=P(1+(0.06)/(12))^(12*6)`

`8,000=P(1.005)^(72)`

`P=8,000/(1.005)^(72)`

`P=\$5,586.42`