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An individual is planning to set-up an education fund for his grandchildren. He plans to invest $18,000 annually at the end of each year. He expects to withdraw money from the fund at the end of 9 years and expects to earn an annual return of 7%. What will be the total value of the fund at the end of 9 years

Respuesta :

TomShelby

Answer:

Educational Fund: $117,274.18

Explanation:

We will calculate the future value of an annuity using the 7% rate

and time of 9 year to a principal of 18,000;

[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]

C 18000

time 9

rate 0.07

[tex]18000 \times \frac{1-(1+0.07)^{-9} }{0.07} = PV\\[/tex]

PV $117,274.18

This will be the value of the education fund after 9 years.

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