You want to have a total of $4000 in two years so that you can put a hot tub on your deck. You find an account that pays 5% interest compounded monthly. How much should you put into this account so that you will have $4000 at the end of two years?
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Step 1
P = the principal amount (the initial amount of money) r = annual interest rate (in decimal) n = number of times that interest is compounded per year t = time the money is invested for in years We know that A = $4000, r = 5% or 0.05 (in decimal), n = 12 (since Show more…
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