Hi:
I am working on a homework problem that requires me to find the amount of money that must be saved over 20 years in order to total $1M. I am given an interest rate of 5%, compounded annually and the initial year 0 principle payment. I think I know how to set up the problem, but I don't understand how to deal with the compounded interest. Can someone explain to me compounded interest? Thank you.
I am working on a homework problem that requires me to find the amount of money that must be saved over 20 years in order to total $1M. I am given an interest rate of 5%, compounded annually and the initial year 0 principle payment. I think I know how to set up the problem, but I don't understand how to deal with the compounded interest. Can someone explain to me compounded interest? Thank you.