Question

When his daughter alisa was born mike began saving for her wedding. He wanted to have saved about 30,000 by the end of 20 years how much would mike deposit into an account that yields 3% interest compounded annually in order to have that amount?

Answer 1

Answer:

$\ 16,610.27$

Step-by-step explanation:

we know that    

The compound interest formula is equal to  

$A=P(1+\frac{r}{n})^{nt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest  in decimal

t is Number of Time Periods  

n is the number of times interest is compounded per year

in this problem we have  

$t=20\ years\\A=\ 30,000\\ r=0.03\\n=1$  

substitute in the formula above

$30,000=P(1+\frac{0.03}{1})^{1*20}$  

$30,000=P(1.03)^{20}$  

$P=30,000/(1.03)^{20}$

$P=\ 16,610.27$