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Question

How much money should I invest at an annually compounded interest rate of 5% so that I have 500,!000$ in ten years? Express your answer as a dollar value rounded to the nearest cent.

Accepted Answer

This question is equivalent to asking, "What is the present value of 500,!000 paid 10 years from now if the annually compounded interest rate is 5%?" This present value is 500,!000(1+0.05)^10 $306,!956.63.