Suppose you want to invest enough today in an account that willgrow to $20,000 in...

Suppose you want to invest enough today in an account that will grow to $20,000 in 10 years. If you can earn 6% on your investment, how much must you set aside?

Select one:

a. $5,584

b. $35,816

c. $20,000

d. $11,168

Solutions

Expert Solution

Let's apply the concept of compounding here to calculate the principal to be invested (say P)

P*(1+0.06) ^10 = $20,000

P = $20,000/(1.06) ^10

P = $11,168

jeff jeffy answered 2 years ago

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