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Saving for College. You want to create a college fund for a child who is now 3 years old. The fund should grow to $60,000 in 15 years. If an investment available to you will yield 6% per year, how much must you invest in a lump sum now to realize the $60,000 when needed? (Hint: Use Appendix A.2.)

Answer :

Answer:

present value  = $25035.90

Explanation:

given data

future value = $60,000

rate = 6% = 0.06

time period = 15 year

solution

we get here present value that is express as

present value = [tex]\frac{future \ value}{(1+rate)^{time}}[/tex]     ........................1

put here value

present value = [tex]\frac{60000}{(1+0.06)^{15}}[/tex]  

solve it and we get

present value  = $25035.90

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