Question

How much would you need to deposit in an account now in order to have $4000 in the account in 15 years? Assume the account earns 4% interest compounded quarterly. Round your answer to the nearest cent.

Please give explanation

Answer 1

$2201.60 to the nearest cent.

Explanation:

4000 = P(1 + 0.04/4)^(15*4) where P is the amount you need to deposite

P = 4000 / (1 + 0.04/4)^60

= 4000/ 1.01^60

= 2201.798464.