At the birth of their child, how much should a couple invest to have $2 000...
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At the birth of their child, how much should a couple invest to have $2 000 on the child's 20th birthday, if interest is 7%, compounded quarterly? At the birth of their child, how much should a couple invest to have $2 000 on the child's 20th birthday, if interest is 7%, compounded quarterly?
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To calculate the amount a couple should invest to have 2000 on their childs 20th birthday we can use the compound interest formula A P1 rnnt Where A the future value of the investment 2000 in this case P the principal amount the initial investment we are trying to find r the annual interest rate 7 or 007 n the number of times the interest is compounded per year quarterly so 4 t the number of years the money is invested for 20 years in this case Plugging in the values 2000 P1 0074420 2000 P1 0017580 2000 P1017580 2000 P 466095 P 2000 466095 P 42941 Therefore the couple should invest approximately 42941 at the birth of their child ... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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