You would like to give your daughter $40,000 towards her college education thirteen years from now. How much money must you set aside today for this purpose if you can earn 6.3% on your
Funds?
A) $17,750.00
B) $17,989.28
C) $18,077.05
D) $18,213.69
E) $18,395.00

Question

Quizplus · Accepted Answer

To find the present value, use the formula for present value of a future sum: PV = FV / (1 + r)^n, where FV is the future value ($40,000), r is the interest rate (6.3% or 0.063), and n is the number of years (13). Calculating this gives approximately $18,077.05.

You Would Like to Give Your Daughter $40,000 Towards Her