Ann and Tom want to establish a fund for their grandsons college education. What lump sum must they deposit at a 6.9% annual interest rate, compounded quarterly, to have 40,000 in the fund at the end of 10 years

Question

kropot72 · Answer

$$A=P(1+\frac{r}{4})^{t}$$
A = the amount after t quarters = 40,000
P = the lump sum originally invested
r = annual interest rate as a decimal = 0.069
t = time in quarters = 10 * 4 = 40
Now just substitute in the equation and solve for P.

anonymous · Answer

Got it. Ty :)

anonymous · Answer

I thought I had it but did something wrong. Could you possibly help a little more?

kropot72 · Answer

$$40000=P(1+\frac{0.069}{4})^{40}$$
$$P=\frac{40000}{1.01725^{40}}$$

anonymous · Answer

Thanks so much!!

kropot72 · Answer

You're welcome :)