Answer:
future value = $49163.8
so required amount will be $491200 nearest $100
Step-by-step explanation:
given data
annual interest rate = 6 %
annuity = $300 per month
time period = 10 years
to find out
how much money will they have for the college expenses
solution
we know that effective rate will be
effective rate = [tex]\frac{0.06}{12}[/tex]
effective rate = 5 × [tex]10^{-3}[/tex]
number of payment = 12 × 10 = 120
so future value will be express as
future value = annuity × [tex]\frac{(1+r)^t-1}{r}[/tex] .........1
future value = 300 × [tex]\frac{(1+5*10^{-3})^{120}-1}{5*10^{-3}}[/tex]
future value = 300 × 163.8793
future value = $49163.8
so required amount will be $491200 nearest $100
