Question

How much money should be deposited today in an account that earns 5.5% compounded monthly so that it will accumulate to 11,000 in three years?The amount of money that should be deposited is $.Round up to the nearest cent

Answer 1

$9,367.75

Step-by-step explanation

The amount, A, that an amount invested, P, will yield at a rate of r% over time t is given as

A = P (1 + r)ᵗ

For this question

A = 11,000

P = ?

r = 5.5% = 0.055

t = 3

11,000 = P (1 + 0.055)³

11,000 = P (1.055)³

1.055³ = 1.17424

11,000 = P (1.055)³

11,000 = 1.17424P

We can rewrite this as

1.17424P = 11,000

Divide both sides by 1.17424

(1.17424P/1.17424) = (11,000/1.17424)

P = $9367.75

Hope this Helps!!!