AJ is saving for a trip for his family and as of today has accumulated $450...
AJ is saving for a trip for his family and as of today has accumulated $450 in a trip fund. AJ's goal is to accumulate $1800, or 4 times this amount to support the trip. Assuming that all of AJ's trip fund is invested to earn an interest rate of 5%, how long, in years and in fractions of a year, will it take AJ to achieve his goal?
Homework Answers
We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.
1800=450*(1.05)^n
(1800/450)=(1.05)^n
Taking log on both sides;
log 4=n*log (1.05)
n=log 4/log (1.05)
=28.41 years(Approx).
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