keon wants to have $6000 in 20 years. calculate how much he should invest now at

Algebra
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keon wants to have $6000 in 20 years. calculate how much he should invest now at 8% interest, compounded annually in order to reach his goal.round to the nearest cent

Jun 20th, 2015

Thank you for the opportunity to help you with your question!

Given

Maturity amount, A = $6000

Time period, n = 20 years

Interest rate = 8% , compounded annually

To find, Principal P

We know, compound interest formula -

A = P * (1+R)^n

Or, P = A / (1+R)^n

P = 6000 / (1+ 0.08)^20

P = $ 1287.289

or, Principal = $ 1287 ....(rounded to nearest integer)

Hence, Keon must invest $1287 to reach his goal

Please let me know if you need any clarification. I'm always happy to answer your questions.
Jun 20th, 2015

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