Question

Don is trying to save $35000 in 15 years. How much should he deposit into an account that gives 6.5% annual interest, compounded quarterly, in order to meet his goal?

a) $14,068.20
b) $15,012.45
c) $16,284.60
d) $17,113.80

Answer 1

Don should deposit approximately $14,068.20 into the account to meet his goal.

Step-by-step explanation:

To calculate the amount that should be deposited into an account in order to meet a goal, we can use the formula for compound interest. In this case, Don wants to save $35,000 in 15 years with an annual interest rate of 6.5% compounded quarterly. The formula for compound interest is:

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

Where:

• A is the amount of money accumulated after the specified time period
• P is the principal amount (the initial deposit)
• r is the annual interest rate (expressed as a decimal)
• n is the number of times that interest is compounded per year
• t is the specified time period in years

Using this formula, we can calculate the amount that Don should deposit:

A = P(1 + 0.065/4)^(4 * 15)

By rearranging the formula to solve for P:

P = A / (1 + 0.065/4)^(4 * 15)

Plugging in the values, we get:

P = 35000 / (1 + 0.065/4)^(4 * 15)

After evaluating the expression, we find that Don should deposit approximately $14,068.20 into the account to meet his goal.