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 4 years?
A. $4002.73
B. $3807.90
C. $3942.47
D. $4372.49

Answer 1

\[P = P_{i} \times (1 + \frac{ r }{ K })^{TK} \]
Where Pi = the initial amount,
r = the rate
k = the of times compounded per year
t = the # of years

\[5000 = P_{i} \times (1 + \frac{ 0.06 }{ 3 })^{3 \times 4} \]
\[5000 = P_{i} \times (1.02)^{12} \]
\[\frac{ 5000 }{ 1.02^{12} }= P_{i} \]
\[P_{i} = 3942.47\]

Answer 2

Basically just inputting variables then solving for Pi

Answer 3

All you really need to know is the formula and what each variable represents, then any problem is relatively easy.