MHB Compounding/Investment Question

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To determine how much Bob must invest today to reach his goal of $10,000 in five years with a GIC at 6% interest compounded daily, the compound interest formula is applied. The variables include the future value (A) of $10,000, the interest rate (r) of 0.06, the compounding frequency (n) of 365, and the time (t) of 5 years. The missing variable is the present value (P), which can be calculated by rearranging the formula. By solving for P, Bob can find the initial investment required to achieve his goal. This calculation is essential for effective financial planning for his graduation party.
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Bob wants to throw a party when he graduates from high school in five years. He needs $10000. He can invest in a GIC which pays 6% compounded daily. How much must he invest today?
 
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eleventhxhour said:
Bob wants to throw a party when he graduates from high school in five years. He needs $10000. He can invest in a GIC which pays 6% compounded daily. How much must he invest today?

Let's start with the formula for compound interest: $$A=P \left(1+\frac{r}{n} \right)^{nt}$$, where $A$ is the new total amount after calculating interest, $P$ is the amount of money you start with, $r$ is the percent interest (in decimal form), $n$ is the number of times the interest is calculated per year and finally $t$ is the number of years.

Let's start this way. We have all the variables in the equation except for one. What are we missing?
 

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