Question

New parents wish to save for their newborn's education and wish to have $40,000 at the end of 19 years. How much should the parents place at the end of each year into a savings account that earns an annual rate of 5.1% compounded annually? (Round your answers to two decimal places.)
$  

How much interest would they earn over the life of the account?
$  

Determine the value of the fund after 11 years.
$

Answer 1

FVA:([(1+r)^n-1]=r) А B 52 Deposit in each year (P) 53 54 Here, 55 56 AInterest rate per annum 57 B Number of years 58 C Number of payments per per annum 59 A:C Interest rate per period (r) 60 BxC Number of periods (n) Future value of annuity (FVA) 5.10% 19 5.10% 19 61 40,000 62 Deposit in each year (P) $ 1,296.83 40000:(((1+5.1%)^19-1):5.1%) Interest earned 15,360.23 =40000-1296.83*19 69 Value after 11 years $ 18,520.33 70 =FV(5.1%,11,-1296.83,0,0)

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