Compound interest.

Question

Determine the principal P that must be invested at rate r, compounded monthly, so that $500,000 will be available for retirement in t years.

r = 5%,     t = 10

Answer 1

Step 1:

The principal amount $ .

The rate of interest .

The period of time years.

Compounded monthly times per year.

The total amount after 10 years $.

Using compound interest formula amount .

The total amount is

The principal amount $ .

Solution:

The principal amount $ .