Suppose you want to have 10000 in an account at the end of 15 years. How much money would need to be deposited now if the account earns 5% interest compounded quarterly? Round the answer to the nearest cent.

Solution

Solution

Principal : 4745.68

Solution steps

Translate the problem into an equation:

10000 = P (1 + \frac{0.05}{4})^{4 \cdot 15}

Solve for

P, 10000 = P (1 + \frac{0.05}{4})^{4 \cdot 15} : P = 4745.68

Principal : 4745.68

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