Assuming that your bank pays an interest rate of 5% per annum, you would need to deposit $3553.41 to accumulate $5000 in a 7-year period. We calculate this by using the compound interest formula:
Amount = P (1 + r/n)nt
Substitute the values:
5000 = P(1 + 0.05/1)1 × 7
Make P the subject of the formula and calculate:
P = 5000/(1 + 0.05)7
P = 3553.41 Read more