how much must be deposited today into the following account in order to have a 110000 dollar college fund in 13 years. assume no additional deposits are made. an account with quarterly compounding and an APR of 7.86%. how much should be deposited today

Solution

h o w m u c h m u s t b e d e p os i t e d t o d a y in t o t h e f o ll o w in g a cco u n t in or d er t o ha v e a 110000 d o ll a r co ll e g e f u n d in 13 ye a rs . a ss u m e n o a dd i t i o na l d e p os i t s a re ma d e . an a cco u n t w i t h q u a r t er l y co m p o u n d in g an d an A PR o f 7.86%. h o w m u c h s h o u l d b e d e p os i t e d t o d a y

Amount : 302587.59

Solution steps

Translate the problem into an equation:

A = 110000 (1 + \frac{0.0786}{4})^{4 \cdot 13}

110000 (1 + \frac{0.0786}{4})^{4 \cdot 13} = 302587.58898 \dots

Round to the nearest hundredth:

302587.59

Amount : 302587.59