How much would you need to deposit in an account now in order to have 2000 in the account in 10 years? Assume the account earns 7% interest compounded monthly.

Solution

Solution

Principal : 995.19

Solution steps

Translate the problem into an equation:

2000 = P (1 + \frac{0.07}{12})^{12 \cdot 10}

Solve for

P, 2000 = P (1 + \frac{0.07}{12})^{12 \cdot 10} : P = 995.19

Principal : 995.19

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