- #1
brownrebecca333
- 1
- 0
Homework help please: If I want to have $60,000 in 8 years, how much would I need to deposit in the bank today if the account pays an interest rate of 9%?
brownrebecca333 said:Homework help please: If I want to have $60,000 in 8 years, how much would I need to deposit in the bank today if the account pays an interest rate of 9%?
60000/((1 + .09/f)^(8*f)) where f = compounding frequencybrownrebecca333 said:Homework help please: If I want to have $60,000 in 8 years, how much would I need to deposit in the bank today if the account pays an interest rate of 9%?
To calculate the principal, you can use the formula P = A / (1 + r)^n, where P represents the principal, A represents the amount, r represents the interest rate, and n represents the number of compounding periods. Plug in the values for A, r, and n to solve for P.
Simple interest is calculated based on the original principal amount, while compound interest takes into account the accumulated interest from previous periods. This means that compound interest will result in a higher total amount paid over time compared to simple interest.
The interest rate directly affects the principal amount by determining the amount of interest that will be added to the principal over time. A higher interest rate will result in a higher principal amount.
Yes, the principal amount can change over time if there are additional deposits or withdrawals made to the account. However, the initial principal amount will remain the same unless there are any changes in the interest rate or compounding periods.
Most financial calculators have a function specifically for calculating the principal amount. To use this function, input the values for the amount, interest rate, and number of compounding periods, and the calculator will automatically solve for the principal amount.