SOLUTION: If 4 years of college are expected to cost $150,000 18 years from now, how much must be deposited now into an account that will average 8% annually in order to save the $150,000?
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Question 761805: If 4 years of college are expected to cost $150,000 18 years from now, how much must be deposited now into an account that will average 8% annually in order to save the $150,000? By how much would your answer change if you expected 11% annually? Answer by josmiceli(19441) (Show Source):
You can put this solution on YOUR website! Let = amount deposited now
Let = the current savings
After 1st year,
---------------
After 2nd year,
----------------
After 3rd year,
----------------------
So, this is the general rule:
where = the number of years since initial deposit
given:
$37,537.35 needs to be deposited now
---------------------------------
Rate = 11%
$22,923.33 needs to be deposited now
