Tamera Watson is saving for her daughter's college education. She wants to have $50,000 available when her daughter graduates from high school in four years. If the investment she is considering will pay 8.25 percent compounded monthly, how much will she have to invest today to reach her target? (Round to the nearest dollar.)

Question

Quizplus · Accepted Answer

To find the present value, use the formula for compound interest: $ PV = \frac{FV}{(1 + r/n)^{nt}} $. Here, FV = $50,000, r = 0.0825, n = 12, t = 4. Plugging in these values gives approximately $35,987.

Tamera Watson Is Saving for Her Daughter's College Education