You and your best friend want to backpack through Europe. You have done some research and discovered that it will cost $2,000 for the plane ticket, rail pass, food, and lodging. You have already saved $1,500. If you invest this money in a savings account with a 3% 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

You and your best friend want to backpack through Europe.  You have done some research and discovered that it will cost $2,000 for the plane ticket, rail pass, food, and lodging.  You have already saved $1,500.  If you invest this money in a savings account with a 3% 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.

pfenn1 · Answer

$$2000 = 1500 (1 + 0.03)n$$Rearrange and solve for n.

anonymous · Answer

wow, i can't thank you enough. thank you so much.

pfenn1 · Answer

You're welcome.