how much money should be invested at 5% compounded monthly to produce $10,000 in 7years?

Question

jdoe0001 · Answer

$\bf Balance= P\left(1+\frac{r}{n}\right)^{nt}\ \quad \
r = \textit{rate in decimal format, }5\% = 0.05\
P= \textit{Principal or original amount}\
n= \textit{periods per year, 12 in 1year}\
t = years$

solve for "P" and plug in your values

jdoe0001 · Answer

notice  that $\bf 10,000= P\left(1+\frac{0.05}{12}\right)^{12\cdot 7}$

anonymous · Answer

do i divide 10,000 from the other side?

anonymous · Answer

@jdoe0001

jdoe0001 · Answer

yes, that'd be one way, yes

wolf1728 · Answer

5 % compounded monthly equals
(1.05/12)^12
=1.0511618979
= 5.11618979% yearly interest 

We need a formula that solves for principal
Principal = Total ÷ (1 + Rate)^Years
Principal = 10,000 ÷ (1.0511618979)^7
Principal = 10,000 ÷ 1.4180360522
Principal = 7,052.01