Question

How much do you need to invest to make $14,000 in 6 years with a 4.5% interest rate? Be sure to round your answer to the nearest cent

Answer 1

$11,046 to make $14,000 in 6 years with a 4.5% interest rate.

Explanation:

Setting A equal to $14,000, r equal to 4.5%, expressed as a decimal (0.045), n equal to 1 (because the interest is compounded annually), and t equal to 6, we can solve for P:

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

P = $14,000 / (1 + 0.045)^(6)

P = $11,045.96

A is the amount you'll have at the end of the investment period,

P is the initial principal (the amount you're investing),

r is the annual interest rate (as a decimal),

n is the number of times the interest is compounded per year,

t is the number of years the investment is made.