Use the table to answer the question.
Time
(years)
Total Amount of the Investment
(dollars)
Total Interest Earned
(dollars)
2 12,712.28 712.28
3 19,611.14 1,611.14
4 26,899.15 2,899.15
5 34,598.26 4,598.26
Peter and his wife want to buy a house, and they are planning to save $500 each month for the down payment.
The table shows how much interest Peter and his wife can earn if they invest $500 each month with a 5.5% annual interest rate, compounded monthly.
If the goal is to save at least $25,000 for the down payment, how long should Peter and his wife invest $500 each month? How long would it take to save $25,000 if they were to save $500 each month with no interest?
(1 point)
Peter and his wife should invest $500 monthly at 5.5% annual interest for
years. With no interest, it would take them
months to save up $25,000.
To find out how long Peter and his wife should invest $500 each month at 5.5% annual interest to reach their goal of saving at least $25,000, we can look for the closest value in the "Total Amount of the Investment" column that exceeds $25,000.
From the table, we can see that the total amount of the investment after 5 years is $34,598.26, which exceeds $25,000. Therefore, Peter and his wife should invest $500 monthly at 5.5% annual interest for 5 years to reach their goal.
Next, we can calculate how long it would take to save $25,000 if they were to save $500 each month with no interest. Since they save $500 each month, we can divide $25,000 by $500 to find out how many months it would take.
25,000 รท 500 = 50
Therefore, it would take them 50 months to save up $25,000 without any interest.