SOLUTION: You want to have a $25,000 college fund in 5 years. How much will you have to deposit now in an account with an APR of 8% with annual compounding

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Question 885440: You want to have a $25,000 college fund in 5 years. How much will you have to deposit now in an account with an APR of 8% with annual compounding
Answer by lwsshak3(11628) About Me  (Show Source):
You can put this solution on YOUR website!
You want to have a $25,000 college fund in 5 years. How much will you have to deposit now in an account with an APR of 8% with annual compounding
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Compound Interest formula: A=P(1+i)^n, P=initial investment, i=interest rate per compounding period, n=number of periods, A=amount after n-periods.
For given problem:
P=To be determined
i=8%
n=5
A=25000
..
25000=P(1+.08)^5
25000=P(1.08)^5
P=25000/(1.08^5)
P=17014.58
How much will you have to deposit now? $17,014.58