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You want a college fund for your newborn which will be worth 300,000 in 18 years. You purchase a CD with an 18 year maturity at 7%, compounded quarterly. How much did you pay for the CD if it will be worth what you want it to?

Respuesta :

Given:

[tex]\text{Amount}=300,000;\text{ r=}7\text{ \% ; }n=4\text{ ; t=18}[/tex][tex]\text{Amount(A)}=P(1+\frac{r}{n})^{nt}[/tex][tex]300000=P(1+\frac{0.07}{4})^{4\times18}[/tex][tex]300000=P(\frac{4.07}{4})^{4\times18}[/tex][tex]300000=P(1.0175)^{72}[/tex][tex]P=\frac{300000}{(1.0175)^{72}}[/tex][tex]P=86028.6615[/tex]

Therefore , I have to pay 86028.66 .

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