can u help me please

Question

how much must be deposited into the following account in order to have 30,000 in 5 years for a down payment on a house? assume no additional deposits are made. An account with annunal compounding and apr of 5 percent

Answer 1

A(t) = A₀(1 + r)ⁿ

 

A₀ = initial deposit = ?

t = number of years = 5

r = 0.05

1 + r = 1 + 0.05 = 1.05

 

A(5) = 30,000

 

30,000 = A₀(1.05⁵)

 

Solve for A₀.

 

A₀ = 30,000 / 1.05⁵ ≅ 23,505.78