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Popular Word Problems >

How much money should be deposited today in an account that earns 3.5 % compounded monthly so that it will accumulate to 15,000 in 2 years?

Solution

Ho w m u c h m o n ey s h o u l d b e d e p os i t e d t o d a y in an a cco u n t t ha t e a r n s 3.5 % co m p o u n d e d m o n t h l y so t ha t i t w i ll a cc u m u l a t e t o 15, 000 in 2 ​ ye a rs ?

Solution

Principal : 13987.33

Solution steps

Translate the problem into an equation:

15000 = P (1 + \frac{0.035}{12})^{12 \cdot 2}

Solve for

P, 15000 = P (1 + \frac{0.035}{12})^{12 \cdot 2} : P = 13987.33

Principal : 13987.33

Popular Examples

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