00:01
This problem says kevin is going to invest in an account paying an interest rate of 2 % compounded monthly.
00:06
How much would kevin need to invest to the nearest $100 for the value of the account to reach $84 ,000 in 10 years? so since we're compounded monthly, we're going to use this formula where y is our final amount, and we know what we want our final amount to reach, and that's $84 ,000.
00:22
What we don't know is the a value or the initial value or how much we're going to have to invest.
00:26
So we're going to leave that as a times one plus our rate.
00:30
Which was given to us as 2%, but in the formula, we do need to put it as its decimal representation, which would be 0 .02, divided by our end value, where our in value is the number of times we're compounding monthly, and since this is, or excuse me, compounding in a year.
00:44
So since this is compounded monthly, there's 12 months in a year.
00:47
So it's going to be compounded 12 times in a year, and that end value will repeat in the exponent, and t is our time in years.
00:54
And we wanted to reach this $84 ,000 in 10 years...