Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A couple decides on the following savings plan for their childs education. When the child is 6 month old, and every 6 months thereafter, they

A couple decides on the following savings plan for their childs education. When the child is 6 month old, and every 6 months thereafter, they will deposit $300 dollars into a savings account that pays 9.5% interest compounded semi-annually. However, after the childs 10th birthday, having made 20 such payments, they will stop making deposits and let the accumulated balance earn compund interest at the same rate for the next 8 years, until the child is 18 years old.

How much will the couple have in the savings account when the chils is ready for college at 18 years old? Round your answers to the nearest cent.

Note that the problem has two steps. The first step is to calculate the annuity, and the second step is just compound interest.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Canadian Public Finance

Authors: Genevieve Tellier

1st Edition

1487594410, 978-1487594411

More Books

Students also viewed these Finance questions