Question

Compute the amount of money that must be deposited at the end of every month into an account paying 12% compounded annually to accumulate to $100 000.00 in ten years. (10 Points) $426.31 $450.59 $433.33 $440.55

Answer 1

The initial amount is $30335.333

Explanation:

The required amount will be given by the formula

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

Where A = total compounded amount

P = principal amount

r = rate

n = number of times interest is compounded

t = the number of years.

So A = p(1+r/n)^(nt)

100000 = p(1+(0.12/10))^(10*10)

100000= p(1+0.012)^(100)

100000= p(1.012)^(100)

100000= p(3.296486)

100000/3.296486 = p

30335.333 = p

The initial amount is $30335.333