Mr. and Mrs. Bailey need to invest $2906.50 so as to send their son to college.
<h3>Compound interest</h3>Compound interest is given by:
where A is the amount after t years, P is initial amount, r is the rate and n is the times compounded per period
Given that n = 1, r = 9% = 0.09, A = $7500 t = 11. Hence:
Mr. and Mrs. Bailey need to invest $2906.50 so as to send their son to college.
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Answer:
5 years
Step-by-step explanation:
In the question we are given;
We are required to determine the time taken for the money invested to accrue to the given amount;
Using compound interest formula;
where n is the interest period and r is the rate of interest, in this case, 4/12%(0.33%)
Therefore;
introducing logarithms on both sides;
But, 1 year = 12 interest periods
Therefore;
Number of years = 60.61 ÷ 12
= 5.0508
= 5 years
Therefore, it will take 5 years for the invested amount to accrue to $6163.59