Your first child turns 7 years old today when your parents decide to set aside money for her education as a birthday present. Their goal is to have a bank savings account containing the equivalent to $20000 in today's dollars on your daughters 18th birthday. The estimated inflation rate is 7% and the bank pays 3% compounded annually. What lump sum should your parents deposit on your daughters 7th birthday?
Your first child turns 7 years old today when your parents decide to set aside money for her education as a birthday present. Their goal is to have a bank savings account containing the equivalent to $20000 in today's dollars on your daughters 18th birthday. The estimated inflation rate is 7% and the bank pays 3% compounded annually. What lump sum should your parents deposit on your daughters 7th birthday?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Your first child turns 7 years old today when your parents decide to set aside money
for her education as a birthday present. Their goal is to have a bank savings account
containing the equivalent to $20000 in today's dollars on your daughters 18th
birthday. The estimated inflation rate is 7% and the bank pays 3% compounded
annually. What lump sum should your parents deposit on your daughters 7th
birthday?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcedcc193-8d21-4752-897e-24e941906088%2F5290d202-902c-4d7c-b1d7-1cff40b21091%2F2sbyezw_processed.png&w=3840&q=75)
Transcribed Image Text:Your first child turns 7 years old today when your parents decide to set aside money
for her education as a birthday present. Their goal is to have a bank savings account
containing the equivalent to $20000 in today's dollars on your daughters 18th
birthday. The estimated inflation rate is 7% and the bank pays 3% compounded
annually. What lump sum should your parents deposit on your daughters 7th
birthday?
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