Ann and Tom want to establish a fund for their grandson's college education. What lump sum must they deposit at a 6% annual interest rate, compounded quarterly, in order to have 20000 in the fund at the end of 15 years?

Solution

Solution

Principal : 8185.92

Solution steps

Translate the problem into an equation:

20000 = P (1 + \frac{0.06}{4})^{4 \cdot 15}

Solve for

P, 20000 = P (1 + \frac{0.06}{4})^{4 \cdot 15} : P = 8185.92

Principal : 8185.92

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Ann and Tom want to establish a fund for their​ grandson's college education. What lump sum must they deposit at a 6​% annual interest​ rate, compounded quarterly​, in order to have ​20000 in the fund at the end of 15 ​years?

Solution

Solution

Popular Examples

Ann and Tom want to establish a fund for their grandson's college education. What lump sum must they deposit at a 6% annual interest rate, compounded quarterly, in order to have 20000 in the fund at the end of 15 years?