Question

Naomi‘s parents want to have $50,000 say to her college education if they invest $20,000 today in earn 7% interest compounded annually about how long will it take them to save the $50,000

Answer 1

13 years

Explanation:

Given data

A=50,000

P=20,000

r= 7%

t=??

The compound interest formula is given as

A=P(1+r)^t

Calculate time, solve for t

t = ln(A/P) / r

t= ln(50000/20000)/0.07

t= ln(2.5)/0.07

t= 0.916/0.07

t= 13.0

Hence the time is 13 years