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Homework answers / question archive / My 2-year old daughter wants to go to Harvard (a private U
My 2-year old daughter wants to go to Harvard (a private U.S. university) starting in 2033 (in 16 years’ time). The tuition fee is estimated to be $250,000. How much do I need to put aside starting one month from today and at the end of every one month until I have $250,000 saved up to pay her tuition fees in 2033? Assume I can earn 1% interest per month in my investment account. Please round your answer to two decimal places.
| a. |
$2,934.31 |
|
| b. |
$6,555.22 |
|
| c. |
$14,486.15 |
|
| d. |
$434.31 |
|
| e. |
$1,302.08 |
| Future value of annuity ($250,000) | = | Amount*[{(1=+r)^n -1}/r] | ||||
| Time (n) | = | 16years*12 months=192 months | ||||
| Monthly rate | = | 1% or 0.01 | ||||
| Future value | = | $250,000 | ||||
| $250,000 | = | Amount*[{(1+0.01)^192}-1]/0.01 | ||||
| $250,000 | = | Amount*[{(1.01)^192}-1]/0.01 | ||||
| $250,000 | = | Amount*[(6.7562-1)/0.01] | ||||
| $250,000 | = | Amount*[5.7562/0.01] | ||||
| $250,000 | = | Amount*575.622 | ||||
| $250,000/$575.62 | = | Amount | ||||
| $434.31 | = | Amount | ||||
| monthly saving is $434.31 | ||||||
| Please upvote |
