Question

Gloria is saving for her daughter’s college education. She wants to have $100,000 available when her daughter graduates from high school in four years. If the investment she is
considering will pay 7.25 percent compounded monthly, how much will she have to invest todayto reach her target? (Round to the nearest dollar.)
1.$35,987
2.$49,659
3.$75,581
4.$97,619
5.$74,892

Answer 1

Answer:

The correct answer is that Gloria would have to invest $75,581 today at the rate of 7.25 % to receive $100000 in four years,hence option is correct

Explanation:

FV=PV(1+r)^t

FV=$100000

PV= is unknown

r=7.25%

t=4years

PV=FV/(1+r)^t

PV=100000/(1+0.0725)^4

=$75581

Hence the amount Gloria has to invest today is $75581