Question

Edward wants to have $50,000 in 10 years for college. What single deposit would he need to make now into
an account that pays 4.3% interest, compounded daily, to meet his goal?

Answer 1

Answer:

$\ 32,526.28$  

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  

$t=10\ years\\ A=\ 50,000\\ r=0.043\\n=365$  

substitute in the formula above  

$\ 50,000=P(1+\frac{0.043}{365})^{365*10}$  

$P=\ 50,000/[(1+\frac{0.043}{365})^{3,650}]=\ 32,526.28$