determine the sum of money that will grow to $2000 in six years at 6% compounded monthly
Mathematics · Middle School · Tue Nov 03 2020
Answered on
Given:
Future Value (A) = $2000
Rate ( r ) = 6% or 0.06
Compoundend monthly (n) = 12
Term (t) = 6
Formula for compound interest:
A = P ( 1 + r/n)^nt
Solution:
Substitute the given values for A, r, n and t, then solve for P.
A = P ( 1 + r/n)^nt
2000 = P (1 + 0.06/12)^6(12)
2000 = P (1 + 0.005)^72
2000 = P (1.005)^72
2000 = P (1.432044278)
Divide both sides by 1.432044278
P = 2000/1.432044278
P = $1,3996.6
Final answer:
P = $1,3996.6