Question

How much money should be deposited in an account that earns 5% compounded quarterly so that it will accumulate to $75,000 in 35 years assuing this deposit is a one time deal?

Answer 1

Given:

The compounded quarterly interest, r =5 % = 0.05 and n=4.

The amount accumulates after 35 years, A =75,000.

The period of time. t=35 years.

Required:

We need to find the deposited amount.

Step-by-step explanation:

Let the deposited amount =P.

Consider the formula to find the amount in compounded interest.

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

Substitute n=4, r =0.05, t=35 and A=75000 in the formula to find the deposited amount.

`75000=P(1+(0.05)/(4))^(4*35)`

Solve for P.

`75000=P*5.69251`

`(75000)/(5.69251)=P`
`P=13175.1873`

`P=13175.19`

Final answer: