How much would you need to deposit in an account now in order to have \( \$ 5000 \) in the account in 5 years? Assume the account earns \( 2 \% \) interest compounded monthly. Question Help: \( \square \) Video 1 Submit Question

To find out how much you need to deposit now to reach \( \$5000 \) in 5 years with an interest rate of \( 2\% \) compounded monthly, you can use the present value formula: \[ PV = \frac{FV}{(1 + \frac{r}{n})^{nt}} \] Here, \( FV = 5000 \), \( r = 0.02 \), \( n = 12 \) (compounding monthly), and \( t = 5 \). Plugging the numbers in, you find \( PV \) is approximately \( \$4503.31 \). The power of compound interest is like a snowball effect! Even with a modest rate like \( 2\% \), your money has the chance to grow more than if it were just sitting idle. The earlier you start saving, the more your investments can benefit from this cyclical magic. So, consider starting now rather than later; your future self will thank you!