Question

Khloe is going to invest in an account paying an interest rate of 1.5% compounded annually. how much would khloe need to invest, to the nearest dollar, for the value of the account to reach $54,000 in 11 years?

Answer 1

Khloe needs to invest approximately $45,918, rounded to the nearest dollar, in an account with 1.5% annual interest to reach $54,000 in 11 years. This is calculated using the compound interest formula with the future value, interest rate, and time period given.

Step-by-step explanation:

To determine how much Khloe needs to invest to reach $54,000 in 11 years at an interest rate of 1.5% compounded annually, we use the compound interest formula P = A / (1 + r)^n, where P is the principal amount (initial investment), A is the future value of the investment, r is the annual interest rate (in decimal form), and n is the number of years the money is invested.

Using the provided values:

• A = $54,000 (future value)
• r = 1.5/100 = 0.015 (annual interest rate in decimal)
• n = 11 (number of years)

We get:

P = $54,000 / (1 + 0.015)^11

Calculating the denominator gives us (1 + 0.015)^11, which simplifies to approximately 1.176. Dividing $54,000 by 1.176, we find that Khloe needs to invest approximately $45,918 (to the nearest dollar) to have $54,000 in 11 years. Remember to always round to the nearest dollar as instructed.