Question

Edward wants to have $50,000 in 10 years for college. What single deposit would he need to make now into

an account that pays 4.3% interest, compounded daily, to meet his goal?

Answer 1

`\$32,526.28`

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

`t=10\ years\\ A=\$50,000\\ r=0.043\\n=365`

substitute in the formula above

`\$50,000=P(1+(0.043)/(365))^(365*10)`

`P=\$50,000/[(1+(0.043)/(365))^(3,650)]=\$32,526.28`