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PLEASE HELP

On graduating from college, you recieve $3,000 in gifts from family and friends. You want to invest it for later use as $15,000 down payment on a house. You have found an opportunity that locks in a 10% annual interest rate. How many years will it take to turn your graduation gifts into a down payment?

User ESR
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1 Answer

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Final answer:

To turn your graduation gifts into a down payment, you can use the formula for compound interest. By substituting the given values into the formula, you can find the number of years it will take. In this case, it will take approximately 10.52 years.

Step-by-step explanation:

To calculate the number of years it will take to turn your graduation gifts into a down payment, you can use the formula for compound interest: A = P(1 + r/n)^(nt). In this formula, A is the final amount you want to achieve, P is the principal amount (in this case $3,000), r is the annual interest rate (10% or 0.10), n is the number of times the interest is compounded per year (since it is not specified, we'll assume it is compounded annually), and t is the number of years you want to invest for.

Substituting the values into the formula: $15,000 = $3,000(1 + 0.10/1)^(1t). Simplifying this equation: 5 = (1.10)^t. Taking the logarithm of both sides: log(5) = log((1.10)^t). Using the logarithmic property: t*log(1.10) = log(5). Solving for t: t = log(5)/log(1.10).

Using a calculator, we find that t is approximately 10.52 years. Therefore, it will take approximately 10.52 years to turn your graduation gifts into a down payment.

User Dave Smash
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