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22 May, 01:39

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?

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  1. 22 May, 01:46
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    20,000 = P (1 + 0.1) ^4

    20,000 = P * 1.1^4

    20,000 = P * 1.461

    P = 20,000 : 1.461 ≈ $13,689.25

    Answer: Miranda needs to put now in the bank $13,689.25
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