Answer :
P ≈ 47186.46 is compound interest in order to meet his goal.
What is the simple definition of compound interest?
- When you earn interest on your interest earnings as well as the money you have saved, this is known as compound interest.
- Compound interest is when you add the interest you've already earned back into your principal balance, which increases your returns by compounding them.
- Take the example of a $1,000 savings account earning 5% interest annually. A $50 income in the first year would result in a new balance of $1,050.
P = Future value
r = 0.0116
n = 4
t =5
[tex]A = P( 1 + \frac{r}{n})^{nt}[/tex]
[tex]50000 = P( 1 + \frac{0.0116}{4} )^{4.5}[/tex]
[tex]50000 = P( 1.0029)^{20}[/tex]
[tex]P = \frac{50000}{( 1.0029)^{20} }[/tex]
P ≈ 47186.46
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