Question

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?

Answer 1

A-13.5

Explanation:

Answer 2

Answer: 13.543 years ( approx )

Explanation:

Here, the principal amount = 20,000

Annual rate of interest = 7 %

Let the amount will be $ 50,000 after t years,

The total compounded amount after t years = $ 50000

`\implies 20000(1+(7)/(100))^t=50000`

`\implies 2(1+0.07)^t=5`

`\implies (1.07)^t=2.5`

By taking log on both sides,

`\implies t log (1.07)=log(2.5)`

`\implies t=(log(2.5))/(log(1.07))`

`\implies t=13.5428471\approx 13.543\text { years}`