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