Problema Solution
You think that in 15 years, it will cost $ 214,000 to provide your child with a 4- year college education. Will you have enough if you take $ 75,000 today and invest it for the next 15 years at 4 percent?
Answer provided by our tutors
P = $75,000 principal
r = 0.04 or 4% annual interest rate
t = 15 years
A = the future value
A = P(1 + r)^t
A = 75000(1 + 0.04)^15
A = $135,070.76
since 135,070.76 < 214,000 you will not have enough to provide $ 214,000.00.