You and your best friend want to go on a cruise to Alaska. You have done some research and discovered that it will cost $2800 for the plane tickets, all-inclusive cruise fare, and souvenirs. You have already saved $1900. If you invest this money in a savings account with a 2.5% interest rate compounded annually, how long will it take to earn enough money to go on the trip? Use the compound interest formula A = P (1 + i) n, where A is the accumulated amount, P is the principal, i is the interest rate per year, and n is the number of years.

Question

Mathematics

Tucker

4 July, 16:43

You and your best friend want to go on a cruise to Alaska. You have done some research and discovered that it will cost $2800 for the plane tickets, all-inclusive cruise fare, and souvenirs. You have already saved $1900. If you invest this money in a savings account with a 2.5% interest rate compounded annually, how long will it take to earn enough money to go on the trip? Use the compound interest formula A = P (1 + i) n, where A is the accumulated amount, P is the principal, i is the interest rate per year, and n is the number of years.

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Winston · Answer 1

To calculate for the years it would take, we use the compound interest formula. F=P (1+i) ^n. substitute F=2800, P=1900, i=2.5% and then we solve for n. We find that n=15.7 years or around 15-16 years.