You think that in 15 years it will cost $212,000 to provide your child with a 4 year college education. Will you have enough if you take $70,000 today and invest it for the next 15 years at 5%?
amount of investment = 70000(1.05)^15
= 145524.97
nope, not even close.
To determine if you will have enough money to cover the cost of your child's college education in 15 years, we need to calculate the future value of the $70,000 investment at a 5% interest rate. Here's how you can do it:
Step 1: Calculate the future value of the investment after 15 years using the compound interest formula:
Future Value = Present Value * (1 + Interest Rate)^Number of Years
In this case, the present value (P) is $70,000, the interest rate (r) is 5% (or 0.05), and the number of years (n) is 15.
Future Value = $70,000 * (1 + 0.05)^15
Step 2: Calculate the future value:
Future Value = $70,000 * (1.05)^15
Future Value ≈ $131,502.23
Based on the calculation, your $70,000 investment will grow to approximately $131,502.23 in 15 years.
However, if the estimated cost of your child's college education is $212,000 in 15 years, it seems that the $70,000 investment alone will not be enough to cover the full cost. You might want to consider investing additional funds or exploring other investment options to bridge the gap between the current investment and the projected college expenses.