Question

Palma wishes to establish a fund for her granddaughter's college education. What lump sum must she deposit in an account that pays with an annual interest rate of 6 percent, compounds monthly, if she wishes to have $10,000 in ten years? Round to two decimals.

Answer 1

10 years = 120 months
Multiplier = 100%+6% = 106% = 1.06

Final value = Original value ×
`(1.06)^(120)`

`10000=x (1.06)^(120)`

`x=10000/(1.06) ^(120)`

`x=9.19`