You would like to give your daughter $50,000 towards her college education sixteen years from now. How much money must you set aside today for this purpose if you can earn 7.8% on your
Funds?
A) $14,775.50
B) $15,033.84
C) $15,250.00
D) $16,245.33
E) $16,909.13

Question

Quizplus · Accepted Answer

To calculate the present value, we use the formula: PV = FV / (1 + r)^n
Where PV is the present value, FV is the future value, r is the interest rate, and n is the number of years. 
Substituting the values given, we get: 
PV = 50,000 / (1 + 0.078)^16
PV = 50,000 / 3.866 
PV = $15,033.84 
Therefore, you should set aside $15,033.84 today to have $50,000 for your daughter’s college education sixteen years from now.

You Would Like to Give Your Daughter $50,000 Towards Her