Final answer:
To save $5000 for 5 years with a 7% interest rate, you need to invest approximately $3915.27 now.
Step-by-step explanation:
To calculate how much you need to invest now with a 7% interest rate to save for 5 years, you can use the formula for compound interest: A = P(1 + r/n)^(nt).
In this case, the initial deposit (P) is the amount you need to find, so let's call it X. The final amount (A) is $5000, the interest rate (r) is 7%, the time (t) is 5 years, and the compound frequency (n) is typically 1 for annual compounding.
Substituting these values into the formula, we get the equation: $5000 = X(1 + 0.07/1)^(1*5). Rearranging the equation, we can solve for X: X = $5000 / (1 + 0.07)^5. Evaluating this expression, we find that you need to invest approximately $3915.27.
Therefore, you need to invest around $3915.27 now with a 7% interest rate to save for 5 years and have $5000.