00:03
So let's say that you want to get $3 ,000 at the end of six months, and you are trying to figure out how much you should invest in your bank account right now in order to get $3 ,000 in six months.
00:14
Your bank account has a plan with an annual interest rate of 3 % compounded monthly.
00:20
So this is just a compound interest problem.
00:23
So let's recall the compound interest formula, or a equals p times 1 plus r over n to the nt.
00:35
So a is the amount that we're solving for.
00:39
P is the principal or the amount that, oh, sorry, we know a.
00:43
A is the amount that you want in the future, or $3 ,000.
00:49
P is the amount that you have to invest right now in order to get that $3 ,000...