You anticipate your child will start college in 18 years. You decide to place $4,732 each year into a 4.1% interest bearing account. How much will be in the account when he begins college?
You anticipate your child will start college in 18 years. You decide to place $4,732 each year into a 4.1% interest bearing account. How much will be in the account when he begins college?
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money
Section: Chapter Questions
Problem 9.18E
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Question
You anticipate your child will start college in 18 years. You decide to place $4,732 each year into a 4.1% interest bearing account. How much will be in the account when he begins college?
Expert Solution
Step 1
Number of years (n) to college = 18
Annuity (P) amount of $4,732 for 18 years
Interest rate ( r ) of 4.1%.
Amount at the end of the period is calculated using the future value annuity formula as below:
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