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Question

A man nearing retirement wants to invest some money in a fund that compounds annually at a rate of 6 percent, so that in five years, he will have at least 100,000$. How much money must he invest now to make that happen? (Give your answer to the nearest dollar.)

Accepted Answer

Let x be the amount the man invests now, in dollars. Then in five years, at a six percent annual interest rate, he will have x 1.06^5 dollars. Therefore, x must be at least 1000001.06^5 = 74726,to the nearest dollar.