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(1 point) This problem is similar to one in your textbook. Suppose that the parents of a child will need $105000 in 9 years for college expenses, and that the bank account earns 9.25% compounded continuously. Round your answers to the nearest cent. You may need to compute your answers to 4 or more decimal places before you round to the nearest cent. a) At what constant, continuous rate must the parents deposit money into the account in order to save the money

Answer :

ANTHOUGOGO

Answer:

The parents need to deposit $7,979.78 annually to save $105,000 at the end of 9 years.

Explanation:

a) Data and Calculations:

Amount needed in 9 years time = $105,000

Bank interest rate = 9.25% compounded continuously

Period of deposit = 9 years

From an online financial calculator:

N (# of periods)  9

I/Y (Interest per year)  9.25

PV (Present Value)  0

FV (Future Value)  105000

 

Results

PMT = $7,979.78

Sum of all periodic payments $71,817.98

Total Interest $33,182.02

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