Question

You are planning to send your child to a summer camp in 9 months. The camp will cost you $1,200 at that time. You have decided to invest a lump sum of money now that will grow to $1,200 by the time it is needed. Assuming the money grows at a nominal annual interest rate of 12.2% compounded daily, how much money should you set aside now to have the funds available when needed?

Answer 1

x = $1095.09

Step-by-step explanation:

let money that would be aside be taken as x

total money that would sum up after having money aside is $1200

time period of camp is 9 month

interest rate is given as 12.2% compounded daily

we know

Future value = present value ×× (1+ r)^(n)

x = $1095.09

Answer 2

x = $1095.09

Step-by-step explanation:

let money that would be aside be taken as x

total money that would sum up after having money aside is $1200

time period of camp is 9 month

interest rate is given as 12.2% compounded daily

we know

Future value = present value ×× (1+ r)^(n)

`1200 = x * (1 + (0.122)/(365))^{(9)/(12) * 365}`

`1200 =  x * 1.095`

x = $1095.09