Ann and Tom want to establish a fund for their grandson's college education. What lump sum must they deposit at a 9.39% annual interest rate, compounded annually, in order to have $20,000 in the fund at the end of 10 years?

Question

Ann and Tom want to establish a fund for their grandson's college education. What lump sum must they deposit at a 9.39% annual interest rate, compounded annually, in order to have $20,000 in the fund at the end of 10 years?

I cannot get the right answer.

Answer 1

so, why not show your work?

P(1+.0939)^10 = 20000

Now just solve for P.

Answer 2

Anna and Tom want to establish a fund for their grandson's college education.What lump sum must they deposit at an 8% annual interest rate, compounded monthly ,in order to have $60,000 in the fund at the end of 10 years.

Answer 3

To determine the lump sum that Ann and Tom must deposit, we can use the formula for compound interest:

FV = PV(1 + r/n)^(nt)

Where:
FV = Future Value
PV = Present Value (lump sum)
r = Annual interest rate (in decimal form)
n = Number of compounding periods per year
t = Number of years

In this case, the future value (FV) is $20,000, the annual interest rate (r) is 9.39%, compounded annually (n = 1), and the number of years (t) is 10.

Plugging in these values, we can solve for the present value (PV):

$20,000 = PV(1 + 0.0939/1)^(1*10)

Simplifying,

$20,000 = PV(1.0939)^10

Divide both sides of the equation by (1.0939)^10 to isolate PV:

PV = $20,000 / (1.0939)^10

Calculating this value, we find that the lump sum they must deposit is approximately $8,975.28.

Answer 4

To solve this problem, we can use the formula for compound interest:

A = P(1 + r/n)^(nt)

Where:
A = final amount
P = principal (initial deposit)
r = annual interest rate (as a decimal)
n = number of times interest is compounded per year
t = number of years

In this case, we want to find the lump sum deposit (P) that will result in a final amount (A) of $20,000 in 10 years.

Let's plug in the given values into the formula and solve for P:

A = $20,000
r = 9.39% = 0.0939 (as a decimal)
n = 1 (compounded annually)
t = 10 years

Now, the formula becomes:

$20,000 = P(1 + 0.0939/1)^(1*10)

Simplifying this equation:

$20,000 = P(1.0939)^10

Divide both sides of the equation by (1.0939)^10:

P = $20,000 / (1.0939)^10

Using a calculator to evaluate (1.0939)^10, we find:

P ≈ $9,312.24

Therefore, Ann and Tom would need to deposit approximately $9,312.24 as a lump sum in order to have $20,000 in the fund at the end of 10 years.

Ann and Tom want to establish a fund for their​ grandson's college education. What lump sum must they deposit at a 9.39​% annual interest​ rate, compounded annually​, in order to have ​$20,000 in the fund at the end of 10 ​years?

so, why not show your work?

Anna and Tom want to establish a fund for their grandson's college education.What lump sum must they deposit at an 8% annual interest​ rate, compounded monthly ,in order to have ​$60,000 in the fund at the end of 10 ​years.

To determine the lump sum that Ann and Tom must deposit, we can use the formula for compound interest:

To solve this problem, we can use the formula for compound interest:

Ann and Tom want to establish a fund for their grandson's college education. What lump sum must they deposit at a 9.39% annual interest rate, compounded annually, in order to have $20,000 in the fund at the end of 10 years?

Anna and Tom want to establish a fund for their grandson's college education.What lump sum must they deposit at an 8% annual interest rate, compounded monthly ,in order to have $60,000 in the fund at the end of 10 years.