You think in 15years, it will cost $214,000 to provide your child with a 4 year college education. Will you have enough if you take $75,000 today and invest it for the next 5 years with $1million
To determine whether you will have enough money to provide your child with a 4-year college education in 15 years, we need to calculate the future value of your investment.
First, let's calculate the future value of the $75,000 investment over 5 years. We'll assume an annual interest rate of return:
Future Value = Present Value * (1 + Interest Rate)^Number of Periods
Assuming an annual interest rate of 5%:
Future Value = $75,000 * (1 + 0.05)^5
Future Value = $93,011.17
Next, let's calculate the future value of the $1 million investment over 15 years. Again, assuming an annual interest rate of 5%:
Future Value = $1,000,000 * (1 + 0.05)^15
Future Value = $1,995,262.32
Now, let's add the two future values together to determine the total amount you will have:
Total Future Value = $93,011.17 + $1,995,262.32
Total Future Value = $2,088,273.49
Based on these calculations, if you invest $75,000 today and an additional $1 million for 5 years, with an assumed annual interest rate of 5%, you would have approximately $2,088,273.49 in 15 years.
Comparing this amount to the estimated cost of $214,000 for your child's college education, it appears that you would have enough money to cover the expenses.