00:01
This is a compounding interest problem, so we should automatically think of the formula a equals p times 1 plus r over n raised to the nt power.
00:10
This formula is straight from the book.
00:12
So now, given the information in our problem, let's determine what all of our variables will be equal to so we can solve.
00:18
First up is a.
00:19
Well, a is the amount of money that we want to have, and we are told that we want to have $10 ,000 at the end of this period of using the account.
00:27
So a is going to be $10 ,000.
00:29
P is unknown.
00:31
We want to know how much money to invest.
00:33
So p is our variable.
00:35
That's what we are looking for.
00:37
Then r, that's the interest rate, and we are told that this account is a 5 % interest rate.
00:42
So 5%, or in decimal form, we move the decimal point, two spaces to the left, giving us 0 .05.
00:49
Next up is n...