Your grandparents leave on their dream vacation to Antarctica in three years.The cruise vacation will cost them $24,000.If they have already saved $22,500 and are investing it at a rate of 2.50% per year,will they have saved enough money for their trip?

Question

Quizplus · Accepted Answer

Using the formula for compound interest, we can calculate how much money the grandparents will have saved in three years:
Final amount = Principal amount x (1 + rate)^time
Final amount = $22,500 x (1 + 0.025)^3
Final amount = $22,500 x 1.07689
Final amount = $24,304.02
Since this amount exceeds the cost of the vacation, the answer is Yes. To determine the amount they needed to save to afford the vacation, we could work backwards from the final amount using the same formula, but it's quicker to look at the answer choices. The correct amount is given in choice D.

Your Grandparents Leave on Their Dream Vacation to Antarctica in Three