13 years. $300,000 9% per year compounded annually.

Question

Mr. Smith wishes to retire in 13 years. When he retires he would like to have $300,000 in his bank account. Mr. Smith's bank pays 9% per year compounded annually. How much should he deposit now to attain his goal?

Answer 1

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

300,000 = P(1 + 0.09/1)¹⁽¹³⁾

P = 300,000/(1 + 0.09/1)¹⁽¹³⁾

P = $97,853.59