At the birth of a baby, a couple decides to make an initial investment of C at the rate of 7% compounded annually so that the amount will grow to $30,000 by her 10th birthday. What should their initial investment be? Round to the nearest dollars.

Answer 1

P = Po(1+r)^t = $30,000
Po(1+0.07)^10 = 30,000
Po = $15,251.

Answer 2

C * (1 + .07)^10 = 30000

Answer 3

The correct answer is 15,250.