Question

Moxie wants to have $5000. How much money does she have to deposit in an account at 6% interest, compounded 3 times per year, in order to have $5000 at the end of 6 years?

Answer 1

Future amount = Present Amount × (1+r)^n

Answer 2

your future amount is 5000
r is the interest rate as a decimal
n is the number of periods

Answer 3

can you solve that...? @jacky27

Answer 4

... so your interest rate is 6%... which is 0.06 as a decimal
and the number of periods is 3 per year, for 6 years = 3 x 6 = 18
so...
\[5000 = deposit \times (1+0.06)^{18}\]

Answer 5

now just solve for deposit

Answer 6

after solving (1+0.06)^18 do you divide by 5000?

Answer 7

no, to get the 1.06^18 to the other side, divide both sides of the equals sign by 1.06^18
this will isolate the deposit, and give u your answer

Answer 8

dammit, hang on, sorry, the interest rate they gave you would most likely be the "annual" interest rate, not the rate every 4 months, the rate you should use in your calculations is more likely to be 0.02, not 0.06... though it dosent specify exactly...

Answer 9

anyway, use 0.02 as r, not 0.06

Answer 10

so it would be (1+0.02)^18 ?

Answer 11

yep which equals approx 1.428,
so divide both sides by 1.428
= necessary deposit amount

Answer 12

so what was your final answer...?