Final answer:
To have $2500 in 6 years with a mutual fund paying 5% compounded monthly, you should invest approximately $1891.77 now.
Step-by-step explanation:
To find out how much you need to invest to have $2500 in 6 years with a mutual fund that pays 5% compounded monthly, we need to use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal (the amount you need to invest), r is the annual interest rate in decimal form, n is the number of times interest is compounded per year, and t is the number of years.
Let's plug in the values into the formula:
$2500 = P(1 + 0.05/12)^(12*6)
Now, we can solve for P:
$2500 = P(1.00416666667)^72
P ≈ $1891.77
So, you should invest approximately $1891.77 now to have $2500 in 6 years.