You think that in 8 years it will cost $247,000 to provide your child a 4-year college education. Will you have enough if you take $77,000 today and invest it for the next 8 years at 8 percent? Round the answer to the nearest cent. Round FV-factor and FVA-factors to three decimal places.
I keep getting 142521.6262 no matter what I do and it says it wrong help!
P = Po + Po*r*t = 77,000 + 77,000*.08*8 = $126,280.
I used simple Interest, because no compounding frequency was given.
To determine whether you will have enough to provide your child a 4-year college education in 8 years, we'll need to calculate the future value of your investment.
To calculate the future value (FV) of an investment, we can use the formula:
FV = PV * (1 + r)^n
Where:
PV = Present Value (the initial investment)
r = Interest rate per period
n = Number of periods
In this case:
PV = $77,000
r = 8% = 0.08 (convert to decimal)
n = 8 years
Using the formula, we can calculate the future value as follows:
FV = $77,000 * (1 + 0.08)^8
FV = $77,000 * (1.08)^8
FV = $77,000 * 1.7177 (rounded FVA factor 8 periods, 8%, to three decimal places)
Calculating this, we find that the future value of your investment after 8 years will be approximately $132,309.50 (rounded to the nearest cent). Therefore, you will not have enough to cover the estimated cost of $247,000 for your child's college education in 8 years.
It seems that you might have made a calculation error. Please double-check your calculations and make sure you used the correct interest rate and rounded the FVA factor correctly.