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How much money should I invest at an annually compounded interest rate of 5% so that I have $500,000 in ten years?

 Dec 5, 2019

Best Answer 

 #1
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FV = PV (1+.05)n

        FV = Future Value = 500 000    PV = Present Value = amount to invest now   .05 = interest rate   n = number of years=10

 

Can you take it from here?   (this assumes a one time investment now)

 Dec 5, 2019
edited by ElectricPavlov  Dec 5, 2019
 #1
avatar+19741 
0
Best Answer

FV = PV (1+.05)n

        FV = Future Value = 500 000    PV = Present Value = amount to invest now   .05 = interest rate   n = number of years=10

 

Can you take it from here?   (this assumes a one time investment now)

ElectricPavlov Dec 5, 2019
edited by ElectricPavlov  Dec 5, 2019
 #2
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i don't think i got it from there :( here's what i thought:

now that i know all the variables(thanks to you!) i have:

500,000=(1.05)10p

500,000=10.5p

but then dividing both sides by 10.5 gives me a really funky number (47619.0476) so i don't think it's right.. what did i do wrong??

 Dec 5, 2019
 #3
avatar+19741 
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Sorry...I mislead you just a bit....the 'n' should be a supescript....I fixed it above....do you see it should be  (1.05)n  

ElectricPavlov  Dec 5, 2019
 #4
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500 000 = PV (1.05)10       Solve for PV = amount to invest now

ElectricPavlov  Dec 5, 2019
 #5
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ok my answer still looks funky but is it like around $306956.63??

 Dec 5, 2019
 #6
avatar+19741 
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500 000/(1.05)10= 306956.63

 

Yep !

ElectricPavlov  Dec 6, 2019

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