Solving the Principle #11I

Question

Suppose you are going to need $12,000 in 15 years. If you can get an average of 6.1% APR compounded daily over that time, how much would you need to deposit now in order to meet your goal?

Answer 1

A = p(1 + r/n)^nt, where A = balance, p = principal, r = rate, n = number of calculations a year, t = number of years

 

12000 = p(1 + 0.061/365)^365(15)

12000 = p(1 + 0.000167123288)⁵⁴⁷⁵

12000 ≈ p(1.000167123288)⁵⁴⁷⁵

12000 ≈ p(2.49658045)

4806.57 ≈ p

 

An investment or approximately $4,806.57 is needed.