Question

How much would you need to deposit in an account now in order to have $2000 in the account in 5 years? Assume the account earns 2% interest compounded monthly.

Answer 1

Answer: 500

Explanation:

formula for interest is

I= Principle x Rate x Time

2% as a decimal is 0.02

Answer 2

$1950.74

Explanation:

step 1

x(1 + 0.06/12)^5=2000

step 2

x= 2000/(1 + 0.06/12)^5

= 1950.741337