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
We will assume the interest is compounded yearly
P = $75,000 the principal
t = 15 years
r = 0.04 or 4% is the annual rate
A = the future value
A = P(1 + r)^t
A = 75000(1 + 0.04)^15
A = $135,070.76
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$135,070.76 < $214,000 thus you will not have enough money.