Question

Tuition of â$1968 will be due when the spring term begins in 6 months. What amount should a student depositâ today, at 7.16â%, to have enough to pay theâ tuition?

Answer 1

Answer:

$113.16               (2 decimal place)

Step-by-step explanation:

The formula for calculating the payment amount is shown below:

             P = iF/(1+i)^N-1

Where:   P = The amount to be made periodically

              i  = Interest rate per period

              F = The future amount to be achieved

              N = The total number of payments for the entire loan or investment

              i  =  7.16/12  = 179/300

              F =  $1968

              N = 6

               P = (179/300*$1968)/(1+179/300)^6-1

                P = $1174.24/(1+179/300)^6-1

                P = $1174.24/(479/300)^5

                P = $1174.24/(479/300)^5

                 P = $1174.24/10.3769875

                 P = $1174.24/10.3769875

                 P = $113.1580818

                 P ≈ $113.16