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#1 2013-05-21 03:29:57

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

amount to deposit

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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#2 2013-05-21 07:15:55

bobbym
Administrator
From: Bumpkinland
Registered: 2009-04-12
Posts: 105,318

Re: amount to deposit

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.
No great discovery was ever made without a bold guess.

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#3 2013-05-22 02:59:12

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

Re: amount to deposit

thank you

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#4 2013-05-22 04:19:12

zetafunc.
Guest

Re: amount to deposit

bobbym wrote:

Hi mom;

I am investing $5431.09

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

#5 2013-05-22 05:30:39

bobbym
Administrator
From: Bumpkinland
Registered: 2009-04-12
Posts: 105,318

Re: amount to deposit

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.
No great discovery was ever made without a bold guess.

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#6 2013-05-22 05:57:00

zetafunc.
Guest

Re: amount to deposit

Approximately $785.84...

785.84*(1.045[sup]48[/sup]) ≈ 6500

#7 2013-05-22 06:00:28

bobbym
Administrator
From: Bumpkinland
Registered: 2009-04-12
Posts: 105,318

Re: amount to deposit

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.
No great discovery was ever made without a bold guess.

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#8 2013-05-22 06:05:34

zetafunc.
Guest

Re: amount to deposit

But isn't it being compounded monthly?

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

#9 2013-05-22 06:08:25

bobbym
Administrator
From: Bumpkinland
Registered: 2009-04-12
Posts: 105,318

Re: amount to deposit

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.
No great discovery was ever made without a bold guess.

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#10 2013-05-22 06:15:34

zetafunc.
Guest

Re: amount to deposit

So it is actually 4.59% monthly?

#11 2013-05-22 06:24:31

bobbym
Administrator
From: Bumpkinland
Registered: 2009-04-12
Posts: 105,318

Re: amount to deposit

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.
No great discovery was ever made without a bold guess.

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