You set up a college fund in which you pay $3500 each year at the beginning...

You set up a college fund in which you pay $3500 each year at the beginning of the year. How much money (in $) will you have accumulated in the fund after 29 years, if your fund earns 7% compounded annually?

Expert Solution

We can calculate the desired result as follows:

Yearly Payment (pmt) = $ 3,500

Interest Rate (rate) = 7%

Period (nper)= 29 years

Using the FV function in excel sheet, we can calculate the funds accumulated as follows:

= FV(rate, nper, -pmt, pv, 1(beginning of period))

= FV(7%, 29, -3500, 0, 1)

= $ 327,112.75

So, the funds accumulated after 29 years are $ 327,112.75

jeff jeffy answered 2 years ago

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