Question

Naomi’s parents want to have 50,000, saved for her college education, if they invest 20000 today and earn 7% interest compound annually, about how long will it take them to save 50 thousand

Answer 1

Naomi’s parents want to have $50,000 saved for her college education. If they invest $20,000 today and earn 7% interest compounded annually, about how long will it take them to save the $50,000?

A. 13.5 years

Explanation:

I got the answer right on Plato

Answer 2

`13.54\ years`

Explanation:

we know that

The compound interest formula is equal to

`A=P(1+(r)/(n))^(nt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`A=\$50,000\\ P=\$20,000\\ r=0.07\\n=1`

substitute in the formula above and solve for t

`\$50,000=\$20,000(1+(0.07)/(1))^(t)`

`2.5=(1.07)^(t)`

Applying log both sides

`log(2.5)=t*log(1.07)`

`t=13.54\ years`