Question

Tremayne is saving for his daughter's college education. If the savings account earns 4% interest compounded monthly, and he wants to have $50,000 in 15 years, what must the principal be? Round your answer to the nearest dollar.

Answer 1

Answer: $27,467.98

Explanation:

Use the compound interest formula and substitute the given values: $50,000=P(1+.0412)12(15). Simplify using the order of operations: $50,000=P(1.003333333)180. Finally, round to the nearest hundredth or nearest cent. P≈$27,467.98.

Answer 2

$27,468.

Explanation:

$50,000=P(1+.04/12)12(15)