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Leslie Porter is planning a trip to Europe upon graduation in two years. She anticipates that her trip will cost $14,000. She would like to set aside an amount now to save for the trip. How much should she set aside if her savings earns 4% interest compounded quarterly

Respuesta :

Answer:

$12,929

Explanation:

Amount = $14,000

Rate=4%= 0.04

Number of Times Compounded= 4

Time= 2 years

For Compound Interest,

Amount = P(1+ ʳ/ₙ)ⁿᵗ

14000 = P(1+0.04/4)²ˣ⁴

14000=P(1+0.01)⁸

14000=P(1.01)⁸

P= 14000/(1.01)⁸

=$12928.77

Leslie should set aside an approximate sum of $12,929 for her trip.

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