Question

Ben recently made a one-time investment of $20,000 in the Florida 529 educational savings plan for his three-year-old son, Mitch. Assume the plan yields a constant 6 percent return for the next 15 years. What will be the value of the investment after 15 years?

Answer 1

The value of Ben's $20,000 investment in the Florida 529 educational savings plan after 15 years, with a 6 percent return, will be $47,931.40.

Step-by-step explanation:

Ben recently made a one-time investment of $20,000 in the Florida 529 educational savings plan for his three-year-old son, Mitch, with a constant 6 percent return for the next 15 years. To find the value of this investment after 15 years, we need to use the formula for compound interest:

Future Value = Present Value × (1 + rate of interest)^number of periods

Let's plug in the values:

Future Value = $20,000 × (1 + 0.06)^15

Using a calculator, we get:

Future Value = $20,000 × (1.06)^15

Future Value = $20,000 × 2.39657

Future Value = $47,931.40

Therefore, after 15 years, the value of Ben's investment in the Florida 529 plan for his son Mitch will be $47,931.40.