Question

How much would you need to deposit in an account now in order to have $2000 in the account in 10 years? Assume the account earns 5% interest compounded quarterly. Round your answer to the nearest cent.

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Answer 1

As-salamu alaykum! I hope this answer gone pretty well will better explaination!

Answer 2

To calculate the initial deposit needed to have $2000 in the account in 10 years with 5% interest compounded quarterly, we can use the formula for compound interest:

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

Where:

- A is the future value (in this case, $2000)

- P is the principal amount (the initial deposit we want to find)

- r is the annual interest rate (5% or 0.05)

- n is the number of times interest is compounded per year (quarterly, so 4)

- t is the number of years (10)

Rearranging the formula to solve for P, we get:

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

Substituting the values into the formula, we have:

P = 2000 / (1 + 0.05/4)^(4*10)

Calculating this equation gives us the value of P, which is approximately $1,308.69.