I just need an explanation with the answers on numbers 14-15. Thanks 14) The ave

Question

I just need an explanation with the answers on numbers 14-15. Thanks

14) The average cost of a 4-year college education is projected to be $110,000 in 20 years. How 14) much money should be invested now at 6.5%, compounded quarterly, to provide $110,000 in 20 years? A) $8342.64 B) S79,685.91 C) $110,000.00 D) S30,293.40 Solve the problem. Round to the nearest cent. 15) compounded annually. Find the amount he will have on deposit after 3 years. A) $21,550.63 B) S10,762.50 C) $15,762.50 D) S10,250.00

Explanation / Answer

14.

We use the formula:
A=P(1+r/400)^4n
where
A=future value
P=present value
r=rate of interest
n=time period.

Hence

110,000=P(1+0.065/4)^(4*20)

Hence

P=110,000/(1+0.065/4)^(4*20)

=110,000/3.631154168

=$30293.40(Approx)

2.

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

Hence

A=5000(1.05)^2+5000(1.05)^1+5000

=$5000[1.05^2+1.05+1]

=$5000*3.1525

=$15762.50

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