Question
Your cousin has just won the lottery and wants to create an account that will have $100,000 in 16 years to help pay for their child's college tuition. If the account has a fixed interest rate of 4.6% compounded 4 times each year, how much money should they put into the account?
Answers
drwls
Interest is compounded 64 times at
1.0115 times the previous balance.
X*(1 + 0.046/4)^64 = 100,000
X*2.0788195= 100,000
X = $48,104.22
1.0115 times the previous balance.
X*(1 + 0.046/4)^64 = 100,000
X*2.0788195= 100,000
X = $48,104.22