If you want to have $3,575 in 29 months,how much money must you put in a savings account today? Assume that the savings account pays 12% and it is compounded monthly; round to nearest $1.

Question

Quizplus · Accepted Answer

First, we need to determine the monthly interest rate:
12% / 12 months = 1% monthly interest rate

Next, we use the formula for compound interest:
future value = present value x (1 + monthly interest rate)^(number of months)

Plugging in the given values:
3,575 = present value x (1 + 0.01)^29

Solving for present value:
present value = 3,575 / (1.01)^29
present value = 2,679.13

Rounding to the nearest dollar, we get the answer of $2,679, which is choice C.

If You Want to Have $3,575 in 29 Months,how Much