Question

Naomi’s parents want to have 50,000, saved for her college education, if they invest 20000 today and earn 7% interest compound annually, about how long will it take them to save 50 thousand

Answer 1

Answer:

$13.54\ years$

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  

$A=\ 50,000\\ P=\ 20,000\\ r=0.07\\n=1$  

substitute in the formula above  and solve for t

$\ 50,000=\ 20,000(1+\frac{0.07}{1})^{t}$  

$2.5=(1.07)^{t}$  

Applying log both sides

$log(2.5)=t*log(1.07)$  

$t=13.54\ years$