Ask Question
5 August, 22:16

Assume the total cost of a college education will be $245,000 when your child enters college in 15 years. You presently have $108,000 to invest for this purpose. What rate of interest must you earn to cover the cost of your child's college education

+5
Answers (1)
  1. 5 August, 22:22
    0
    8.45%

    Explanation:

    The formula to calculate the rate of interest is:

    r = (1/t) (A/P - 1), where

    r = Rate of interest

    t = Time period: 15 years

    A = Accrued amount: 245,000

    P = Principal amount: 108,000

    Now, you can replace the values to find the rate of interest:

    r = (1/15) ((245,000/108,000) - 1)

    r = (0.0667) (2.2685-1)

    r = (0.0667) (1.268)

    r = 0.0845 → 8.45%

    According to this, the answer is that the rate of interst that you must earn to cover the cost of you child's college education is 8.45%.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Assume the total cost of a college education will be $245,000 when your child enters college in 15 years. You presently have $108,000 to ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers