A couple would like to create a college fund for their newborn son. They estimate they...

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A couple would like to create a college fund for their newborn son. They estimate they...

A couple would like to create a college fund for their newborn son. They estimate they will need $150,000 in 18 years. Assume they can obtain a 4% return, how much would they need to invest annually to reach this goal?

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Answer 1

Answer #1

Future value of annuity=Annuity[(1+rate)^time period-1]/rate

150,000=Annuity[(1.04)^18-1]/0.04

150,000=Annuity*25.6454129

Annuity=150,000/25.6454129

=$5849(Approx).

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Answer 2

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