00:01
This problem says how much would you need to deposit in an account now in order to have $2000 in the account after 15 years.
00:07
And we're assuming that the account earns 2 % interest compounded monthly.
00:11
So this problem kind of requires us to work backwards because usually we're trying to find the final amount, but this time we're told the final amount or what we want it to be, and that's $2000.
00:21
What we're trying to find is the a value or the initial amount that we have to put in to make this true.
00:26
So that a that's unknown is multiplied by 1 plus r over n where r is our rate.
00:32
And our rate was given as 2%, but in the formula we need to use the decimal representation which is 0 .02, divided by our n value.
00:40
And our n value is the number of times we're compounding in a year, and we were told this is compounding monthly.
00:45
So there's 12 months in a year, and that will be the same 12 for the n value in the exponent.
00:49
And n is multiplied by t, and t is our time in years.
00:53
And we wanted to reach this 2000 in 15 years...