Question

How much will you have to invest to have $6,000 in 4 years 3 months at 4 1\5% annual interest, compounded monthly.

$7,185.50
$5,020.71
$1,016.90
$4,957.33

Answer 1

You have to invest $5,020.71 to have $6,000 in 4 years 3 months at 4 1\5% annual interest, compounded monthly.

Explanation:

Let the principal be x

Amount = $6000

Time = 4 years 3 months =
`4 years +(3)/(12) years = 4.25 years`

Rate of interest =
`4 (1)/(5)\% = (21)/(5)\%`

No. of compounds per year = 12

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

`6000=P(1+(21)/(500 * 12))^(12 * 4.25)`

`(6000)/((1+(21)/(500 * 12))^(12 * 4.25))`=P

P=$5,020.71

Hence You have to invest $5,020.71 to have $6,000 in 4 years 3 months at 4 1\5% annual interest, compounded monthly.