Question

Assume the total expense for your current year in college equals $20,000. How much would your parents have needed to invest 21 years ago in an account paying 8% compounded annually to cover this amount

Answer 1

$3,973.12

Step-by-step explanation:

Calculation for How much would your parents have needed to invest

Let x be the amount your parents have needed to invest

Hence,

$20,000 = x(1+0.08)^21

$20,000 = x(1.08)^21

$20,000 = 5.0338x

Divide both sides by 5.0338

Then, x=$20,000÷5.0338

x=$3,973.12

Therefore the How much would your parents have needed to invest 21 years ago will be $3,973.12