Question

Mr. blochirt is creating a college investment fund for his daughter. he will put in $1,000 per year for the next 5 years starting one year from now and expects to earn a 6% annual rate of return. how much money will his daughter have when she starts college

Answer 1

This is the concept of time value of money, to get the amount of money Blochirt's daughter will have for college we proceed as follows;
A=p(1+r/100)^n
p=principle
r=rate
n=time
therefore using the above formula, the amount of money after 5 years will be:
A=1000(1+6/100)^5
A=1000(1.06)^5
A=1,338.23
The answer is $1,338.20