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% simple interest. Round your answer to the nearest cent.

Answer 1

The underlying formula that you want to use to solve here is

P = A / (1 + RT), where

P = principal amount you need to deposit

A = future value of the account = 6000

R = annual interest rate = 0.06

T = time in years = 15

For this set of information that means taking

P = 6000 / (1 + 0.06*15) = 3157.89

meaning that you need to deposit $3157.89 now