Question

Miranda wants to give her 14-year-old daughter $20,000 when she turns 18. How much does she need to put in the bank now if the interest rate is 10 percent per year? A:$12,418.43 B:$13,660.27 C:$15,026.30

Answer 1

Miranda needs to put approximately $13,660.27 in the bank now.

Step-by-step explanation:

To find out how much money Miranda needs to put in the bank now to have $20,000 in four years with a 10 percent interest rate, we can use the formula for compound interest.

The formula for compound interest is: A = P(1+r/n)^(n*t), where A is the future amount, P is the principal amount (the initial amount), r is the interest rate, n is the number of times the interest is compounded per year, and t is the number of years.

In this case, the future amount is $20,000, the interest rate is 10 percent or 0.10, and the number of years is 4.

Substituting these values into the formula, we get: 20,000 = P(1+0.10/1)^(1*4)

Simplifying the equation, we get: 20,000 = P(1.10)^4

Dividing both sides of the equation by (1.10)^4, we get: P = 20,000 / (1.10)^4

Using a calculator, we find that P is approximately $13,660.27.

Answer 2

`x` × 1.1 × 1.1 × 1.1 × 1.1 = 20,000


`x` × 1.4641 = 20,000


`x= (20,000)/(1.4641)`


`x = $13660.27`