Question

edward wants to have $50,000 in 10 years for college. what single deposit would he need to make snow into an account that pays 4.3% interest, compounded daily to meet his goal

Answer 1

Answer: Single deposit by Edward=$3594 to make it amount for college=$50,000 in 10 years.

Explanation:

Here Compound amount =$50,000

Time=10 years

Rate of interest=4.3%

By the Daily compound interest formula ,we have

`Amount=Principal(1+rate/365)^(365*\ time)\\\Rightarrow\ Amount=Principal(1+4.3/365)^(365*\ 10)\\\Rightarrow\ 50000=P(1+.011)^(3650)\\\Rightarrow\ 50000=P(1.011)^(3650)\\\Rightarrow\ 50000=P(13.911)...........(approx)\\\Rightarrow\ P=(50000)/(13.911)=3594......(approx)`

Therefore Principal amount deposited by Edward is $3594.

Answer 2

$32,526.67

Explanation:

Let the Principle be P

amount here A= $50,000

time n= 10 years n= 10*365=3650 days

rate of interest= 4.3% compounded daily= 4.3/365

let us use compound interest formula to calculate the principle

`A= P(1+(r)/(100))^n`

putting all the values we get

`50000=P(1+(4.3)/(100*365))^10times365`

on solving we get P= $32,526.67

therefore he need to deposit $32,526.67