SOLUTION: The Jacksons are opening a saving account for their childs education. In 18 years they will need about 134,000. If the account earns 6% simple interest, how much money much they
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Question 589087: The Jacksons are opening a saving account for their childs education. In 18 years they will need about 134,000. If the account earns 6% simple interest, how much money much they invest now to cover the cost of the college. I need to know how to write the equation. Thank you!
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Answer by lwsshak3(11628) (Show Source): You can put this solution on YOUR website!
The Jacksons are opening a saving account for their childs education. In 18 years they will need about 134,000. If the account earns 6% simple interest, how much money much they invest now to cover the cost of the college. I need to know how to write the equation.
**
Assume interest is compounded each year.
compound interest formula: A=P(1+r)^n, P=initial investment, r=interest rate per period, n=number of periods, A=amount after n periods.
For given problem:
P=what we want to find
r=.06
n=18
A=134000
..
134000=P(1+.06)^18
134000/(1.06)^18=P
using calculator:
P≈$46,946 (money that must be invested now to cover the cost of college)
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