Question

Parents wish to have $ 160 comma 000 available for a​ child's education. If the child is now 2 years​ old, how much money must be set aside at 7 % compounded semiannually to meet their financial goal when the child is​ 18?

Answer 1

Answer: Amount = $53,214.35

Step-by-step explanation:

Given:

Future Value = $160000

r(semiannually) = $\frac{7}{2}$= 3.5% = 0.035

n(time)= $(18-2)\times2$= 32  

a(amount) = ?

Therefore, we can compute the amount using the formula for future value.

⇒ $160000 = a\times[(1.035)^{32}]$

⇒ $160000 = a\times[ (1.035)^{32}]$

⇒ $160000= \times a$

⇒ a = $53,214.35

Therefore, the child's parent should aside $53,214 at the bank.