Question

You just inherited​ $10,000. While you plan to squander some of it​ away, how much should you deposit in an account earning​ 5% interest per year if​ you'd like to have​ $10,000 in the account in 10​ years?

Answer 1

$6,139.13

Step-by-step explanation:

Assuming annual compounding, the expression that describes the future value (F) of an investment (P) at an interest rate r for a period of n years is:

`F= P*(1+r)^n`

If the desired value after 10 years at 5% per year is $10,000, the required investment is given by:

`10,000= P*(1+0.05)^(10)\\P=(10,000)/(1.628894627)\\P=\$6,139.13`

You should deposit $6,139.13 in the account.