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The compound interest formula can be rewritten as
P = A/(1 + r/n)nt.
Find the principal P that you need to invest on the day your child is born at 4.2% annual interest compounded quarterly to make your child a millionaire on his or her 21st birthday. (Round your answer to the nearest cent.)
Compound interest, or 'interest on interest', is calculated using the compound interest formula.
The formula for compound interest is A = P(1 + r/n)^nt, where P is the principal balance, r is the interest rate, n is the number of times interest is compounded per time period and t is the number of time periods.
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