Question

How much would you need to deposit in an account now in order to have $4000 in the account in 5 years? Assume the account earns 3% interest compounded monthly.

Answer 1

PV= $3,443.48

Step-by-step explanation:

Giving the following information:

Future value= $4,000

Interest rate= 0.03/12= 0.0025

Number of months= 5*12= 60

To calculate the initial investment required, we need to use the following formula:

PV= FV/(1+i)^n

PV= 4,000/(1.0025^60)

PV= $3,443.48