Adella wants to have $10,000.00 saved in 5 years. Her local bank offers an account at 4% APR

compounding monthly. How much would she need to deposit to reach her goal?

$8000.33

$8191.67

$8189.67

$8219.29

Compound interest

Generally

A=P (1+r/n) ^nt

Where

P = principal amount

r = annual rate of interest

t = number of years

A = amount of money after year t

n = number of times the interest is compounding per year.

In this case the, the n=12, since the APR is compounding monthly.

Also R=4%=4/100=0.04

t=5years

Adella wants her money to amount to $10,000 in 5 years

Then, A=$10,000

Applying the formulas

A=P (1+r/n) ^nt

$10,000=P (1+0.04/12) ^ (12*5)

$10,000=P (1+0.003333) ^60

$10,000=P (1.003333) ^60

$10,000=P (1.221)

Then P=$10,000/1.221

P=$8190.008

The correct answer is the third option

It is closer to the third option than it is to the second option