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Dafna11 [192]
2 years ago
12

Bill is saving for his son's college education. If the savings account earns 5% interest compounded monthly, and he wants to hav

e $45,000 in 10 years, what must the principal be?
Mathematics
2 answers:
Otrada [13]2 years ago
6 0

Total money that will be in the account in 10 years = 45000

Time period = 10 years

Rate of interest = 5% or 0.05

n = 12 (number o times the money is compounded)

Let the principal (p) be = x

Formula for compound interest = A=p(1+\frac{r}{n})^{nt}

Putting the values in the formula we get,

45000=x(1+\frac{0.05}{12})^{10*12}

45000=x(\frac{12+0.05}{12})^{120}

45000=x(1.004)^{120}

45000=1.614x

x=27881.04

Hence, the principle amount should be approximately $27881.

bonufazy [111]2 years ago
3 0

Answer:

$27,322.25

Step-by-step explanation:

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