A couple just had a baby. How much should they invest now at 5.2% compounded daily...

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A couple just had a baby. How much should they invest now at 5.2% compounded daily...

A couple just had a baby. How much should they invest now at 5.2% compounded daily in order to have $50,000 for the childs education 17 years from now? Compute the answer to the nearest dollar. Assume a 365 days a year.

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Answer 1

Answer #1

Let investment be x

Effective interest rate = 5.2% / 365

number of periods = 365*17

= 6205

So, x(1+0.052/365)^(17*365)

= $50000

x = (50000)/(1+0.052/365)^(17*365)

= 20,657.66

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Answer 2

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