You want to begin a college fund for your newborn child; you hope to accumulate $240,000 within 18 years from now.

Present Value of a Future Amount. You want to begin a college fund for your newborn child; you hope to accumulate $240,000 within 18 years from now. If you are able to invest at 11% compounded annually, how much must you invest in a lump sum today to realize the $240,000 when needed?

Expert Solution

PV = FV / (1 + r)^t

PV = $240,000 / (1 + 0.11)^18

PV = $36,677.32

jeff jeffy answered 2 years ago

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