A new mother wants to establish a college education fund for her newborn child. She wants this
Question:
A new mother wants to establish a college education fund for her newborn child. She wants this fund to be worth $100,000 in 18 years.
a. If she invests $75 per month, what is the minimum rate of return she would need to earn on her investment? Assume monthly compounding. (Consider using the future value function FV( ) in your spreadsheet.)
b. Suppose the mother knows of an investment that will guarantee a 12% annual return compounded monthly. What is the minimum amount she should invest each month to achieve her goal?
Future ValueFuture value (FV) is the value of a current asset at a future date based on an assumed rate of growth. The future value (FV) is important to investors and financial planners as they use it to estimate how much an investment made today will be worth...
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a Monthly Contribution 75 Invest Period 18 years Annual ...View the full answer
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Related Book For 
Spreadsheet Modeling & Decision Analysis A Practical Introduction to Management Science
ISBN: 978-0324656633
5th edition
Authors: Cliff T. Ragsdale
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