1. Assume you invest $15,000 in a mutual fund (e.g. money market fund) at an APR of 7% compounded quarterly. How long, to the nearest tenth of a year, will it take the $15,000 to grow to $50,000? Solve using logarithmic equations. Round your answer to the nearest whole number. Explain your results.
2. At the end of 18 years, will your investment have grown to the $50,000 needed for your child’s college fund?
3. Assume you invest $15,000 in a mutual fund (e.g. money market fund) with interest compounded continuously, what rate of interest will you have to earn in order for the $15,000 to grow to $50,000 in 18 years? Round your answer to the nearest tenth of a percent. Explain what this answer means in comparison with the results of #1 and #2 above in terms of the stated goal.
4. Assume your goal is to cover the entire cost of your child’s college education; estimated to be $100,000. Determine exactly how much money needs to be invested today at 7%, compounded monthly, so your child has a college fund of $100,000 in 18 years? Round your answer to the nearest whole number. How does this compare with the amount of money invested in #1, #2, and #3 above?
Can you answer question #4?
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