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**mom****Member**- Registered: 2012-04-25
- Posts: 94

How much money would have to be deposited now at 4.5% interest compounded monthly to accumulate to $6500 in 4 years?

Could someone please show me how to work this one? Which formula is it that I use?

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**bobbym****Administrator**- From: Bumpkinland
- Registered: 2009-04-12
- Posts: 107,718

Hi mom;

I am investing $5431.09

**In mathematics, you don't understand things. You just get used to them.****If it ain't broke, fix it until it is.**** Always satisfy the Prime Directive of getting the right answer above all else.**

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**mom****Member**- Registered: 2012-04-25
- Posts: 94

thank you

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**zetafunc.****Guest**

bobbym wrote:

Hi mom;

I am investing $5431.09

How are you getting that? I am getting nowhere near that answer...

**bobbym****Administrator**- From: Bumpkinland
- Registered: 2009-04-12
- Posts: 107,718

Hi;

What are you getting?

**In mathematics, you don't understand things. You just get used to them.****If it ain't broke, fix it until it is.**** Always satisfy the Prime Directive of getting the right answer above all else.**

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**zetafunc.****Guest**

Approximately $785.84...

785.84*(1.045[sup]48[/sup]) ≈ 6500

**bobbym****Administrator**- From: Bumpkinland
- Registered: 2009-04-12
- Posts: 107,718

Hi zetafunc;

Isn't that a lot of money earned off of 4.5% interest?

I think the problem is that you have her earning 4.5% per month. She is only earning 1 / 12 of that per month.

**In mathematics, you don't understand things. You just get used to them.****If it ain't broke, fix it until it is.**** Always satisfy the Prime Directive of getting the right answer above all else.**

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**zetafunc.****Guest**

But isn't it being compounded monthly?

It is a lot of interest -- I would have expected that to be per year.

**bobbym****Administrator**- From: Bumpkinland
- Registered: 2009-04-12
- Posts: 107,718

Hi;

mom wrote:

How much money would have to be deposited now at 4.5% interest compounded monthly to accumulate to $6500 in 4 years?

That means a little bit better than 4.5 % because you get a bit per month.

**In mathematics, you don't understand things. You just get used to them.****If it ain't broke, fix it until it is.**** Always satisfy the Prime Directive of getting the right answer above all else.**

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**zetafunc.****Guest**

So it is actually 4.59% monthly?

**bobbym****Administrator**- From: Bumpkinland
- Registered: 2009-04-12
- Posts: 107,718

It is 4.5% / 12 monthly. That gives you a higher effective interest than compounding yearly.

**In mathematics, you don't understand things. You just get used to them.****If it ain't broke, fix it until it is.**** Always satisfy the Prime Directive of getting the right answer above all else.**

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