How much do you need to invest today in order to have enough money for your child’s college?

Congratulations, you’ve just become a parent! You want to make sure your new baby has the best education possible so you plan to make an investment today to pay for college. Your new baby is amazing, but is no Doogie Howser, so you will be paying for your child’s college in 18 years from now. You expect that college will cost $100,000 at that time. In the meantime, your financial adviser tells you that you can earn 7% on your investment. How much do you need to invest today in order to have enough money for your child’s college?

Expert Solution

Present value=100,000*Present value of discounting factor(rate%,time period)

=100,000/1.07^18

=100,000*0.295863916

which is equal to

=$29586.39(Approx)

jeff jeffy answered 2 years ago

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