Question

You want to invest money for your newborn child so that she will have $50,000 for college on her 18th birthday. Determine how much you should invest if the best annual rate that you can get on a secure investment is 5.2% compounded annually.

Round your answer to two decimal places.

Answer 1

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

Answer 2

so the rate of compounding is 5.2% or .052

use

V = Vi (1 + r)^t

t = 18 years
V = 50000
r = .052

you want to find Vi

Answer 3

so that would be
$50,000=vi (1+0.052)^18

Answer 4

right....just solve for Vi

Answer 5

vi=20076.44?

Answer 6

that's what I get :)

Answer 7

let me check really quickly..

Answer 8

yes it works...thank you :D

Answer 9

not a problem :)