Question

Saving for College. You want to create a college fund for a child who is now 3 years old. The fund should grow to $60,000 in 15 years. If an investment available to you will yield 6% per year, how much must you invest in a lump sum now to realize the $60,000 when needed? (Hint: Use Appendix A.2.)

Answer 1

present value = $25035.90

Step-by-step explanation:

given data

future value = $60,000

rate = 6% = 0.06

time period = 15 year

solution

we get here present value that is express as

present value =
`(future \ value)/((1+rate)^(time))` ........................1

put here value

present value =
`(60000)/((1+0.06)^(15))`

solve it and we get

present value = $25035.90