SOLUTION: If college costs $200,000 for 4 years, how much to I need to invest at my son's birth to pay for all 4 years of college using t = 18 at 4% interest. I've been given the formula A

Question 593172: If college costs $200,000 for 4 years, how much to I need to invest at my son's birth to pay for all 4 years of college using t = 18 at 4% interest. I've been given the formula A = P e ^rt. I don't understand how to calculate this and I don't undestnad what e is? Thank you.
Answer by scott8148(6628) (Show Source): You can put this solution on YOUR website!
A is the amount after some time t ($200000 and 18 yr in your case)

P is the principal (initial investment that you're trying to find)

r is the rate of interest ___ this particular formula assumes continuous compounding

e is Euler's Number, the base for natural logarithms ___ there is a key for it on scientific calculators
___ there is a calculator in Windows ___ when you open it, click on view to select scientific

200000 = P e^(.04 * 18)

200000 / [e^(.76)] = P

93533.29 = P (approx)
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