Tometeo wants to have $50,000 saved 15 years from now. How much must he deposit every month into an account that pays 2.8% interest, compounded monthly?
Mathematics · High School · Sun Jan 24 2021
Answered on
Given:
Principal Amount ( P ) = $50,000
Interes Rate ( r ) = 2.8% or 0.028 ( divide by 100)
Term ( t ) = 15
Compounded monthly ( n ) = 12
Formula for Compound Interest:
A = P ( 1 + r/n)^nt
A = Future value
Solution:
Substitute the given values of P, r, n and t to the formula for the compound interest.
A = $50,000 ( 1 + 0.028/12)^(12)(15)
A = $50,000 ( 1.023333…)^(180)
A = $50,000 ( 1.52 )
A = $50,000 ( 1.52 )
A = $76,000
Final answer:
A = $76,000