What lump sum do parents need to deposit in an account earning 14%, compounded monthly, so that it will grow to $90,000 for their son’s coll

Question

What lump sum do parents need to deposit in an account earning 14%, compounded monthly, so that it will grow to $90,000 for their son’s college fund in 15 years? (Round your answer to the nearest cent.)
$_____

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Thái Dương 4 years 2021-08-09T10:44:38+00:00 1 Answers 58 views 0

Answers ( )

  1. nguyetanh
    0
    2021-08-09T10:46:22+00:00
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    Answer:

    $11,149

    Step-by-step explanation:

    The computation of the amount that need to be deposit is shown below:

    Here we have to determine the present value by applying the above formula

    Present value = Future value ÷(1+ rate of interest)^number of years

    where,

    Future value is $90,000

    Rate of interest is 14% ÷ 12 = 1.167%

    And, the years would be 15 × 12 = 180

    Now the present value is

    = $90,000 ÷(1+1.167%)^180

    = $11,149

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