A mutual fund pays 9% per annum compounded monthly. How muchshould I invest now

Question

A mutual fund pays 9% per annum compounded monthly. How muchshould I invest now so that 2 years from now I will have $100 inthe account?
Now I am having an issue with this problem because I am unsureof which formula best fits the problem, and what the process willlook like. I just don't know which numbers to plug where inthe different (pv, fv, N, PMT) slots? please help.
Now I am having an issue with this problem because I am unsureof which formula best fits the problem, and what the process willlook like. I just don't know which numbers to plug where inthe different (pv, fv, N, PMT) slots? please help.

Explanation / Answer

Use the formula for compound interest: Amount = P(1 +rate)number of time periods. Our rate per month is.09/12, and we have 24 months to make 2 years. At the end wewant the amount to be $100. So we solve: 100 = P(1 + .09/12)24, or P = 100/(1 + .09/12)24 = $83.58.

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