If you want to have $10,000 in 10 years,which of the following formulas represents how much money you must put in a savings account today? Assume that the savings account pays 6% and it is compounded monthly. A)10,000/(1 + .05)¹⁰ B)10,000/(1 + .005)¹²⁰ C)10,000/(1 + .06)¹⁰ D)10,000/(1 + .006)¹²⁰

Question

Quizplus · Accepted Answer

The formula for the present value with monthly compounding is: PV = FV / (1 + r/n)^(nt), where r is the annual interest rate (0.06), n is the number of compounding periods per year (12), and t is the number of years (10). Thus, the correct formula is 10,000 / (1 + 0.06/12)^(12*10), which simplifies to 10,000 / (1 + 0.005)^120.

If You Want to Have $10,000 in 10 Years,which of the Following