Question

How much would you need to deposit in an account now in order to have $6000 in the account in 15 years? Assume theaccount earns 8% interest compounded quarterly.

Answer 1

We can use the next formula

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

Where A is the amount, P is the principal, r is the rate n is the periods and t is the time

in our case

A=6000

n=4

r=0.08

t=15 years

We substitute in the formula

`6000=P(1+(0.08)/(4))^(4(15))`

then we isolate the Principal

`P=(6000)/((1+(0.08)/(4))^(4(15)))=1828.70`

The principal is $1828.70

ANSWER

You need to deposit $1828.70 in an account now in order to have $6000