New parents wish to save for their newborn's education and wish to have $46,000 at the end of 17 years. How much should the parents place at the end of each year into a savings account that earns an annual rate of 5.6% compounded annually? (Round your answers to two decimal places.)$ How much interest would they earn over the life of the account?$ Determine the value of the fund after 10 years.$ How much interest was earned during the 10th year?$

Question
Asked Oct 22, 2019

New parents wish to save for their newborn's education and wish to have $46,000 at the end of 17 years. How much should the parents place at the end of each year into a savings account that earns an annual rate of 5.6% compounded annually? (Round your answers to two decimal places.)
$

How much interest would they earn over the life of the account?
$

Determine the value of the fund after 10 years.
$

How much interest was earned during the 10th year?
$

check_circleExpert Solution
Step 1

Computation of yearly payment:

Hence, the yearly payment is -$1,682.02.

В
1Particulars
2 N
з PV
Amount
17
0
5.60%
46,000
Yearly payment -$1,689.02
4 Rate
5 FV
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В 1Particulars 2 N з PV Amount 17 0 5.60% 46,000 Yearly payment -$1,689.02 4 Rate 5 FV

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Step 2

Formula for the computation of yearly payment:

A
В
1Particulars
2 N
Amount
17
0
0.056
46000
6 Yearly payment =PMT(B4,B2,B3,B5)
3 PV
4 Rate
5FV
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A В 1Particulars 2 N Amount 17 0 0.056 46000 6 Yearly payment =PMT(B4,B2,B3,B5) 3 PV 4 Rate 5FV

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Step 3

Computation of interest:

Hence, the interest is $17,...

Interest [S46,000-(s1, 689.02 x17)]
S46,000-$28,713.34
=S17,286.66
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Interest [S46,000-(s1, 689.02 x17)] S46,000-$28,713.34 =S17,286.66

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