You think that in 15 years it will cost $214,000 to provide your child with a 4-year college education. Will you have enough if you take $75,000 today and invest it for the next 15 years at 5%?

Answer 1

is 75000(1.05)^ 15 more or less than 214000 ?

Answer 2

it's more than 214000.

Answer 3

nope,
75000(1.05)^15
= 75000(2.0789..
= 155919.61 < 214000

so it would not be enough

Answer 4

Where are you getting the 1.05 from?

Answer 5

If you just use the Table of Future Value Factors, you'll see that 5% at 15 years is 2.079. Therefore, 75,000 * 2.079 = 155,925. I am really confused as to where the 1.05 comes from...

Answer 6

nevermind... it's the same as 5%. I get it.