How much would you need to deposit in an account each month in order to have $20,000 in the account in 5 years? Assume the account earns 4% interest.

To determine how much you'd need to deposit each month in order to have $20,000 in 5 years, we can use the future value of an annuity formula:

\[
FV = P \times \frac{(1 + r)^n - 1}{r}
\]

Where:
- $FV$ is the future value of the annuity (the amount you want to accumulate, which is $20,000),
- $P$ is the monthly payment (the amount to deposit each month, which we're trying to find),
- $r$ is the monthly interest rate (4% annual interest, so $\frac{0.04}{12} = 0.003333$),
- $n$ is the total number of payments (5 years, so $12 \times 5 = 60$ months).

We will now rearrange the formula to solve for $P$:

\[
P = \frac{FV}{\frac{(1 + r)^n - 1}{r}}
\]

Now, let's calculate it.You would need to deposit approximately **$301.66** each month in order to have $20,000 in the account in 5 years, assuming a 4% annual interest rate.

Would you like more details or have any questions about this calculation?

Here are 5 related questions you might find useful:
1. How would the monthly deposit change if the interest rate were 5% instead of 4%?
2. What happens if you make a lump sum deposit rather than monthly payments?
3. How can you calculate the total interest earned over the 5 years?
4. How does compound interest affect long-term savings compared to simple interest?
5. What if you wanted to reach $50,000 in the same timeframe?

**Tip:** Increasing your monthly deposit, even by a small amount, can significantly increase the final amount due to compound interest.

Find out how much you need to deposit monthly to reach a savings goal of $20,000 in 5 years, with a 4% interest rate. This problem involves the future value of annuities and compound interest calculations, ideal for high school students learning financial mathematics.

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