SOLUTION: My daughter just started 1st grade, I want to have 50,000 in a college fund when she graduates High school. (June) How much would I have to deposit now to reach my goal? getting

Question 227777: My daughter just started 1st grade, I want to have 50,000 in a college fund when she graduates High school. (June) How much would I have to deposit now to reach my goal? getting 8% interest compounded monthly?
thanks
Answer by nerdybill(7384) (Show Source): You can put this solution on YOUR website!
My daughter just started 1st grade, I want to have 50,000 in a college fund when she graduates High school. (June) How much would I have to deposit now to reach my goal? getting 8% interest compounded monthly?
.
Compound interest formula:
http://qrc.depaul.edu/StudyGuide2009/Notes/Savings%20Accounts/Compound%20Interest.htm
.
Years to graduation: 17 years
.
A = P(1 + r/n)^(nt)
For your problem
A is $50,000
P is principal (what we're solving for)
n is 12 (compounded monthly)
r is .08
t is 17
.
50000 = P(1 + .08/12)^(12*17)
50000 = P(1.00667)^(204)
50000 = P(3.8786)
$12,891.09 = P

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