Answer:
Principle (P) = $2,512.56 (Approx)
Step-by-step explanation:
Given:
Interest annually (R) = 9.5% = 0.095
Amount need (A) = $9500
Time period (T) = 14 years
Find:
Principle (P)
Computation:
A = P[e^(R*T)]
9,500 = P[e^(0.095 x 14)]
9,500 = P[3.781]
P = 9,500 / 3.781
Principle (P) = $2,512.56 (Approx)
Mr. and Mrs. Sanchez need to invest $2666 for 14 years in order to be able to contribute $9500 to her education.
A compound interest is given by the formula:
[tex]A=P(1+\frac{r}{n} )^{nt}[/tex]
Where A is the final amount, r is the rate, t is the period, P is the principal and n is the number of times compounded in a period.
Given that A = 9500, r = 9.5% = 0.095, t = 14, n = 1. hence:
[tex]A=P(1+\frac{r}{n} )^{nt}\\\\9500=P(1+0.095)^{14}\\\\9500=3.56P\\\\P=\$2666[/tex]
Mr. and Mrs. Sanchez need to invest $2666 for 14 years in order to be able to contribute $9500 to her education.
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