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aev [14]
3 years ago
12

You want to have 80000 college fund in 12 years. How much will you have to deposit now under the scenario below. Assume that you

make no deposits into the account after the initial deposit.
An APR of 7.5​% compounded daily
Mathematics
1 answer:
stealth61 [152]3 years ago
3 0

9514 1404 393

Answer:

  $32,528.58

Step-by-step explanation:

For simplicity, we'll assume each year has 365 days.

The future value A of principal amount P at rate r compounded daily for t years is ...

  A = P(1 +r/365)^(365t))

We want P when A = 80,000, r = 0.075, and t = 12.

  P = A/(1 +r/365)^(365t)

  P = $80000/(1+0.075/365)^(365·12) ≈ $32,528.58

You will have to deposit about $32,528.58.

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