You want to have $85,000 college fund in 15 years. HOw much will you have to deposit now under the scenario below. Assume that you make no deposits into the account after the initial deposit
An APR of 4% compounded daily.
You should invest?

  1. 👍
  2. 👎
  3. 👁
  1. P = Po(1+r)^n = $85,000

    r = (4%/365)/100% = 0.000109589 = Daily
    % rate expressed as a decimal and based
    on 365 days per year.

    n = 365Comp/yr. * 15yrs. = 5475 Compounding periods.

    P = Po(1.000109589)^5475 = 85000
    Po = 85000/(1.000109589)^5475 = $46650.53

    1. 👍
    2. 👎
  2. 230

    1. 👍
    2. 👎

Respond to this Question

First Name

Your Response

Similar Questions

  1. economics

    a beautiful girl 22 years young has just graduated from college. She accepts a good job and desire to establish her own retirement fund. At the end of each year there after she plans to deposit 2000 in the fund out 15% annual .

  2. Economics/Finance

    How much Jim can accumulate in a private pension fund over 20 years if the fund offers 5% interest compounded annually, and he can afford to deposit $2,000 at the end of every 2nd year? My textbook says the correct answer is

  3. Math

    Jasica Parker would like to have ​$78 comma 000 to buy a new car in 8 years. To accumulate $ 78 comma 000 in 8 ​years, how much should she invest monthly in a sinking fund with 6 % interest compounded​ monthly?

  4. Math

    Don has just received a cash gift of $70,000 from his rich eccentric uncle. He wants to set it aside to pay for his daughter Cynthia's college education. Cynthia will begin college in 13 years and Don's financial advisor says that

  1. Math

    The parents of twin boys started a college fund when the boys were 5 years old. They decided to invest $6,000 into an account that compounds quarterly at a rate of 8.6% annually. If the parents do not invest any additional money

  2. math

    If you borrow $15,000 from your dad for college and you agree to pay him $25,000 back at 8% compound interest per year. How many years do you think you have to do this? In other words, given the amounts and the interest rate, what

  3. Math

    Jeff Associates borrowed $30,000. The company plans to set up a sinking fund that will repay the loan at the end of 8 years. Assume a 12 % interest rate compounded semiannually. What must Jeff pay into the fund each period of

  4. mah

    When Melissa was born, her parents put $8,000 into a college fund account that earned 9% simple interest. Find the total amount in the account after 18 years.

  1. Finance

    shley is planning to attend college when she graduates from high school 7 years from now. She anticipates that she will need $10,000 at the beginning of each college year to pay for tuition and fees, and have some spending money.

  2. MATH

    Please help check my answers to make sure they are correct. I used the "sinking fund payment and present value of an ordinary annuity" formulas to solve this story problem. Thanks! Story: Naomi Dexter is 20 years old. She decides

  3. Math (Algebra 2)

    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

  4. Finance

    5. John and Daphne are saving for their daughter Ellen's college education. Ellen just turned 10 (t=0), and she will be entering college 8 years from now (at t=8). College tution and expenses at State U. are currently $14,500 a

You can view more similar questions or ask a new question.