Madison needs $10 000.00 in 16 years at an interest rate of 3 %/a compounded monthly. How much should she invest?

Answer 1

A = P(1 + r/n)^nt t=16 years, r=3%, n=12 times compounded annually

10,000=P(1+.03/12)^12(16)

10,000 = P(1.0025)^192

P = 10,000/(1.0025)^192 =$6,191.57