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 June Cleaver needs $2,000 in 7 years’ time so she can enroll in a review course in mathematics offered by Algonquin College.  She can earn 9% compounded monthly at a small financial institution.  How much must June deposit now to have $2,000 in 7 years?

 Jul 22, 2021
 #1
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9 % annual interest  compounded monthly is   .09/12 = .0075 %   periodic interest

7 years is  7 * 12 = 84 periods

2000 is future value

 

2000 = d * ( 1+.0075)84        where d = initial deposit amount

d = 1067.69 dollars initial deposit

 Jul 23, 2021

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