Question

How much would you need to deposit in an account in order to have $20,000 in the account in 4 years? Assume the account earns 5% interest.

Answer 1

do 20,000 x 20% (.2) = 4000.
now 20,000-4,000 = 16,000
why did i do 20%? because 5%x4 = 20%

Answer 2

please correct me if I'm wrong, @parthkohli

Answer 3

Sounds good to me... I'll let you know. Thank you.

Answer 4

\[p_{N}=p _{o}(1+\frac{ r }{ k })^{Nk}\] this is the formula for it I just cant find the unknown

Answer 5

How is the interest added in... does it compound annually, quarterly, monthly, daily??

Answer 6

Thats what I dont get. It doesn't say, so I can only assume that it is yearly. I brought that up to my professor but have not received a responds yet.

Answer 7

Thought maybe someone on here could help me out :/

Answer 8

well if it is yearly then you earn 1200 a year with an intial investment of 2000. Just try out several differnt starting points and calculate the interest until you get 20000

Answer 9

I'll try it again, and give you my answer and see if you think its correct or not... thx

Answer 10

if you start with 5882 you are a little bit too short, if you start with 5883 you are a little bit to much. The interest can't compound yearly.

Answer 11

Also is it just one deposit or do you deposit a set amount and then more each month?

Answer 12

It is just a one time deposit

Answer 13

You need more information... im taking a class where all we do are problems like this but we get more information.

Answer 14

If I knew how to use that formula I could solve the problem.

Answer 15

So would I try different compounds? .... \[(1+\frac{ 0.05 }{ 4 })^{4}\] this is how i would set up the last part but I just cant figure out the first part. Im taking a math 142 its a teachers math class.... but im horrible at math already

Answer 16

Has your teacher messaged you back yet?

Answer 17

Its an online class, so it takes a while for him to respond

Answer 18

I found out that it is supposed to be compounded monthly....

Answer 19

Fv = Pv(1+r)^(n); where Fv is the future value, Pv the present value, r is the interest per period, and n is the number of periods in which it gets calculated.

interest rate per period is simply take the year amount and divide by 12 a month is a period

Answer 20

Is this using the formula above? or is this something else?

Answer 21

same basic idea, but a simpler construct.

there are 12*4 periods; with an interest rate of .05/12 per period so its the same content just a different way of presenting it.

Answer 22

i got to head to an exam, ill try to be back later if the library is open

Answer 23

oh ok thank you, ill try it again. Ive been stuck on this problem. Good luck! thanks

Answer 24

\[P_{4}=P_{0}\left( 1+\frac{ 0.05 }{ 12 } \right)^{12(4)}=24,417.91-20,000=4,417.91\]
Does this look correct? if not could you let me know where im wrong

Answer 25

\[20,000=P_o(1+\frac{.05}{12})^{12(4)}\]
\[20,000(1+\frac{.05}{12})^{-12(4)}=P_o\]
that looks better to me since we know the future value and want to determine the present value.