How much money should be deposited today in an account that earns 9.5% compounded monthly so that it will accumulate to $10,000 in three years? (Do not round until the final answer. Then round to the nearest cent.)

Question

anonymous · Answer

9.5% ??? where can i get in on that!!!

blockcolder · Answer

Let P be our mystery amount. Then P must satisfy the ff:
$$10,000=P\left (1+\frac{0.095}{12}\right )^{3\cdot 12}$$
Now, $$P=\frac{10,000}{\left (1+\frac{0.095}{12}\right )^{36}}$$
Then plug this in a calculator. :D

anonymous · Answer

Thank you!