Algebra and Finance

Question

How much would you need to deposit in an account now in order to have $6000 in the account in 15 years? Assume the account earns 6% interest compounded daily.

Answer 1

For daily compounded interest, the formula is:

A = P[1+(r/n)^nt] where...

P is the principal amount

r is the interest rate

n is the annual number of times interest compounds

t is the number of years

Plugging in the values:

$6,000 = P[1+(.06/365)]^5,475

$6,000 = 2.46P

P ≈ $2,439