Michelle needs to save $7,000 for school in the next two years. She found a bank that offers a 9% interest rate compounded annually.
What does she need to deposit at the beginning of the year to have enough money for school?
Answer (2)
100% + 9% = 109% = 1.09 x × 1.0 9 2 = 7 , 000 1.1881 x = 7 , 000 / : 1.1881 x ≈ 5892 A n s w er : $5892
Michelle needs to deposit approximately $5892.57 at the beginning of the year to save $7,000 in two years at a 9% interest rate compounded annually.
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