Question

How much money do you have to put into a bank

account that pays 10% interest compounded annually to have $10,000 in ten years?

Short answer

$3855.43

Step-by-step solution

Step 1. Definition

Interest is the monetary charge for the privilege of borrowing money.

$Principal=\frac{Amount}{{(1+interestrate)}^{time}}$

Step 2.

$$\begin{gathered} =\frac{\$10000}{{(1+0.10)}^{10}} \\ =\frac{\$10000}{1.{10}^{10}} \\ =\$3855.43 \end{gathered}$$

So, $3855.43 have to be put into a bank

account that pays 10% interest compounded annually to have $10,000 in ten years?