Question
In: Finance
Elaine has just received an insurance settlement of $25,000. She wants to save this money until...
Elaine has just received an insurance settlement of $25,000. She wants to save this money until her daughter goes to university. If she can earn an average of 6.5%, compounded annually, how much will she have saved when her daughter enters university eight years from now?
Solutions
Expert Solution
Future value
= Present Value x (1 + r) ^ n
Where,
Present Value = $25,000
r = Rate of interest = 6.5% or 0.065
n = Years of investment = 8
So, Future Value ( Savings )
= $25,000 x (1.065^8)
= $25,000 x 1.654996
= $41,374.9
jeff jeffy answered 2 years agoRelated Solutions
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