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Question 510289: The parents of a child have just come into large inheritance and wish to establish a trust fund for their daughters college education. If they estimate that they will need 100,000 in 13 years, how much should they set aside in the trust now if they can invest the money at 8.5 percent per year compounded annually.
How much money should they set aside if the interest is compounded annually, semiannually and quarterly?
my problem is that I am terrible with word problems and have a hard time setting them up, I have tried the formula A=P(1+rt) and all others and I still get the wrong answers
Answer by scott8148(6628)   (Show Source):
You can put this solution on YOUR website! you almost have the right formula
A = P(1 + r)^t ___ where r is the rate per compounding period and t is the number of periods
ann ___ 100000 = P(1 + .085)^13
semi ___ 100000 = P(1 + .0425)^26
qrt ___ 100000 = P(1 + .02125)^52
these involve exponents and will need to be solved using logs
for the 1st one ___ log(100000) = log(P) + 13[log(1.085)]
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