If you want to accumulate $500,000 in 20 years, how much do you need to deposit today that pays an interest rate of 15%?

Question

Kyler Adams

Mathematics

17 January, 11:06

If you want to accumulate $500,000 in 20 years, how much do you need to deposit today that pays an interest rate of 15%?

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Answers (1)

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Damian Marsh · Answer 1

The answer is $125,000. At that deposit and with 15% interest, you get $18,750 annually. You multiply that by 20 years and that gets you $375,000 from interest plus the original $125,000: which gives you the desired amount of $500,000 after 20 years of 15% interest.