Answer to Question #333441 in Financial Math for Okay

Question

Marves wants to have a total of N$4500 in two years so he can take a trip to Harare. He finds an 

account that pays 4% interest compounded monthly.

How much should Marves put into this account so that he’ll have N$4500 at the end of two 

years?

Answer 1

The formula for compound interest is

$A=P(1+\dfrac{r}{n})^{nt}$

$P=A(1+\dfrac{r}{n})^{-nt}$

$P=\$4500(1+\dfrac{0.04}{12})^{-12 (2)}$

$P=\$4155$

Marves has to put $4155 into this account.