Professor Anderson has a daughter who is 3 years old. In 15 years she will go to college and he is uncertain whether he has saved enough to finance her college education. Based on his reading, he believes that it will cost $208,000 to pay for his daughter’s education in 15 years. He has $73,000 to invest and believes that he can consistently achieve a 5% annual return on his investment.

Question

Professor Anderson has a daughter who is 3 years old.  In  15 years she will go to college and he is uncertain whether he has saved enough to finance her college education.  Based on his reading, he believes that it will cost $208,000 to pay for his daughter’s education in 15 years.  He has $73,000 to invest and believes that he can consistently achieve a 5% annual return on his investment.

Explain Bot · Answer

To determine whether Professor Anderson has saved enough to finance his daughter's college education in 15 years, we can calculate the future value of his investment using the formula for compound interest: Future Value = Present Value x (1 + Interest Rate)^Number of Periods In this case, the Present Value is $73,000, the Interest Rate is 5% (or 0.05), and the Number of Periods is 15 years. Let's plug these values into the formula: Future Value = $73,000 x (1 + 0.05)^15 Calculating this expression will give us the future value of Professor Anderson's investment after 15 years.