Taylor has just received an insurance settlement of $58,400. She wants to save this money until...

Taylor has just received an insurance settlement of $58,400. She wants to save this money until her oldest daughter goes to college. Taylor can earn an average of 5.5 percent, compounded annually, on this money. How much will she have saved for her daughter's college education if her daughter enters college 14 years from now?

a. $123,579.74

b. $108,153.58

c. $82,990.77

d. $187,302.09

e. $110,459.16

Solutions

Expert Solution

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=$58400*(1.055)^14

=$58400*2.116091462

=$123,579.74(Approx).

jeff jeffy answered 1 year ago

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