Answer:
To determine how much you would need to deposit in an account now in order to have $5000 in the account in 5 years with a 7% interest compounded monthly, you can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the account ($5000 in this case)
P = the initial deposit (what we need to find)
r = the annual interest rate (7% or 0.07)
n = the number of times the interest is compounded per year (12 times, since it's compounded monthly)
t = the number of years (5 years in this case)
Plugging in the values, we have:
5000 = P(1 + 0.07/12)^(12*5)
Now, let's solve for P:
P = 5000 / (1 + 0.07/12)^(12*5)
Calculating this using a calculator, we find:
P ≈ $3,695.90
Therefore, you would need to deposit approximately $3,695.90 in the account now to have $5000 in the account in 5 years, assuming a 7% interest compounded monthly.
Explanation:
<3