You anticipate your child will start college in 18 years. You decide to place $4,732 each year into a 4.1% interest bearing account. How much will be in the account when he begins college?
You anticipate your child will start college in 18 years. You decide to place $4,732 each year into a 4.1% interest bearing account. How much will be in the account when he begins college?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You anticipate your child will start college in 18 years. You decide to place $4,732 each year into a 4.1% interest bearing account. How much will be in the account when he begins college?
Expert Solution
Step 1
Number of years (n) to college = 18
Annuity (P) amount of $4,732 for 18 years
Interest rate ( r ) of 4.1%.
Amount at the end of the period is calculated using the future value annuity formula as below:
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