Question

Miranda wants to give her 14-year-old daughter $20,000 when she turns 18. How much does she need to put in the bank now if the interest rate is 10 percent
per year?
future value=Px(1+0)
present value = a to
A $12,418.43
B. $13,660.27
C. $15,026.30

Answer 1

Answer:

The future principal amount invested is $13,660.27 .

Step-by-step explanation:

Given as :

The Amount that saved for future = A = $20,000

The bank applied rate of interest = r = 10%

The time period of loan = t years

Now As Miranda's daughter is 14 year now, and she will give money when her daughter turns 18

∴ The time period of loan = t = 4 years

Let the future principal amount invested = $p

Now, From Compound Interest method  

Amount = principal × $(1+\dfrac{\textrm rate}{100})^{time}$

Or, A = p × $(1+\dfrac{\textrm r}{100})^{t}$

Or, $20,000 = p × $(1+\dfrac{\textrm 10}{ 100})^{4}$

Or, $20,000 = p × $(1.1)^{4}$

Or, $20,000 = p × 1.4641

∴ p = $\dfrac{20,000}{1.4641}$

i.e p = $13,660.269

So, The future principal amount invested = p = $13,660.27

Hence, The future principal amount invested is $13,660.27 . Answer