Melissa Gould wants to invest today in order to assure adequate funds for her sons college education.

Question:

Melissa Gould wants to invest today in order to assure adequate funds for her son’s college education. She estimates that her son will need $20,000 in 18 years; $25,000 in 19 years; $30,000 in 20 years; and $40,000 in 21 years. How much does Melissa have to invest in a fund today if the fund earns the following interest rate?
a. 6 % per year with annual 6 % per year with quarterly 6 % per year with monthly Compounding
Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will...