Question

Malik would like to accumulate $73,100 for his retirement in 19 years. If his local bank promises him 6.16% compounded annually, how much he should invest today?

Answer 1

Okay, here we have this:

Considering the provided information, we are going to calculate the requested principal amount, so we obtain the following:

Then we will substitute in the following formula:

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

P = 73100 / (1 + 0.0616/1)^(1*19)

P = 73100 / (1.0616)^(19)

P = 73100 / (1.0616)^(19)

P ≈ $23,477.95

Finally we obtain that he should invest today approximately $23,477.95.