00:01
Okay, today we're going to say that we want to have $2 ,000 in an account in five years.
00:06
We know the account has 6 % interest compounded monthly.
00:14
So that means 12 months in a year.
00:17
It's compounded.
00:19
We want to find out how much we need to put in there to end up with 2005 years.
00:25
So our principle, this is our equation that we have, p equals a divided by 1 plus 1.
00:31
R over n to the end to the teeth power.
00:35
Principle is going to be our starting amount.
00:38
That is what we want to find.
00:39
How much do we need to put in to make 2005 years? a is the amount that we want to end up with, which is 2000.
00:51
R is the rate, so we know it's happening at 6%.
00:55
N is the amount of times it's compounded.
01:00
And then t is the time over how much time.
01:03
We said five years.
01:05
So again, how much do we need to put into the account to make 2 ,05 years at 6 %'s interest compounded monthly? key, our principle, we need to find out.
01:16
Let's plug everything into the equation.
01:20
2000 is what we're going to have, divided by 1 plus the rate.
01:28
We need to change it to a decimal, which is 0 .06.
01:32
So 0 .06 divided by n, which is the number of times it's compounded 12 times n, 12 again, to the t, the time, five years.
01:47
So here we have a full equation we're able to solve.
01:50
2 ,000 divided by 1 plus 0 .06 divided by 12.
01:58
And let's do that.
02:01
0 .06 divided by 12.
02:05
0 .05.
02:07
So 1 plus 0 .05 to the...
02:16
I'm sorry.
02:17
To the 12 times 5 power.
02:21
Keep solving the equation.
02:23
2 ,000 divided by...
02:25
Well, if we add these, it's just 1 .005 to the 12 times 5 power.
02:34
2 ,000 divided by.....