Question

You want to have $85,000 college fund in 15 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 4% compounded daily.
You should invest?

Answer 1

P = Po(1+r)^n = $85,000

r = (4%/365)/100% = 0.000109589 = Daily
% rate expressed as a decimal and based
on 365 days per year.

n = 365Comp/yr. * 15yrs. = 5475 Compounding periods.

P = Po(1.000109589)^5475 = 85000
Po = 85000/(1.000109589)^5475 = $46650.53

Answer 2

230