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19 votes
19 votes
Mc McGili cuddy wished to invest Sum of money so that the interest each year would pay for this son's collage expenses If the money was invested at 8% and the Collage expenses were $10,000 per year, how should Mr, Mcgillicuddy invest?

User Parijat Purohit
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1 Answer

22 votes
22 votes

\begin{gathered} FV=PV(1+rt) \\ \text{Where:} \\ FV=\text{Future value} \\ PV=\text{Present value} \\ r=\text{rate} \\ t=\text{time} \end{gathered}

So:


\begin{gathered} FV=10000 \\ r=0.08 \\ t=1 \\ 10000=PV(1+0.08) \\ \text{Solve for PV:} \\ PV=(10000)/(1.08)=9259.259259 \end{gathered}

He needs to invest $9259.259259

User Beep Beep
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