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Jamal wants to save $54,000 for a down payment on a home. How much will he need to

Chapter 6, Problem 65

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QUESTION:

Jamal wants to save $54,000 for a down payment on a home. How much will he need to invest in an account with 8.2% APR, compounding daily, in order to reach his goal in 5 years?

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QUESTION:

Jamal wants to save $54,000 for a down payment on a home. How much will he need to invest in an account with 8.2% APR, compounding daily, in order to reach his goal in 5 years?

ANSWER:

Step 1 of 2

The objective is to find the amount Jamal has to invest in order to reach his goal of \($54,000\) in 5 years

 The compound interest formula is,

\(P=A(t)\left[1+\frac{r}{n}\right]^{-nt}\)

The account is worth \(A = $54000\)

The annual percentage rate is  \(r=8.2 \%\)

that is;

\(r=\frac{8.2}{100}\)

\(=0.082\)

The interest is compounded daily \(n = 365\).

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