Question

how much money must be deposited in an account paying 7.25% annual interest, compounded quarterly, to have a balance of $1000 after 10 years?

Answer 1

General formula:
B = D(1+i/n)^nt
i = int rate
n = num of times per year interest credited
t=num years

Answer 2

what do you mean b=d?

Answer 3

b = ending balance
d = initial deposit

Answer 4

im confused

Answer 5

ok lets say you deposit $100 and earn 50%
50% of 100 is 50 so your balance at end of year is 150
so
150=100*(1+0.5)

Answer 6

Compound
Formula for calculating compound interest:


Where,
\[A=P(1+r/t)^{nt}\]
A = final amount
P = principal amount (initial investment)
r = annual nominal interest rate (as a decimal)
n = number of times the interest is compounded per year
t = number of years

Answer 7

so just plug in the 1000, the interest rate .0725, number of years and compounds per year

Answer 8

i do not know how i would set it up like to plug it in or anything

Answer 9

1000=D*(1+.0725/4)^40
solve for D

Answer 10

\[1000/(1+.0725/4)^{40}=P\]

That is what you end up with.

Answer 11

solve for t or p?

Answer 12

There is no t to solve for

Answer 13

You already know t, its 10 years

Answer 14

so solve for p?

Answer 15

It's already solved, you just have to plug it into a calculator

Answer 16

or do it by hand if you want to.

Answer 17

1000/(40725/40000)^40 = 487.48