Question

Tuition of $1465 will be due when the spring term begins in 10

months. What amount should a student deposit today, at 5.53%, to
have enough to pay the tuition?

Answer 1

To calculate the deposit amount, you can use the present value formula. Substitute the given values into the formula and calculate the deposit amount.

Step-by-step explanation:

To calculate the deposit amount, we need to find the present value of the tuition due in 10 months. The formula for calculating present value is:

Present Value = Future Value / (1 + interest rate)^n

Where:

• Future Value = $1465 (tuition due)
• Interest Rate = 5.53% = 0.0553 (converted to decimal)
• n = 10 months

Substituting these values into the formula, we have:

Present Value = 1465 / (1 + 0.0553)^10

Calculating this expression gives us the deposit amount.