question archive 1)Assume the total cost of a college education will be $390,000 when your child enters college in 18 years

1)Assume the total cost of a college education will be $390,000 when your child enters college in 18 years

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1)Assume the total cost of a college education will be $390,000 when your child enters college in 18 years. You presently have $64,000 to invest.

What annual rate of interest must you earn on your investment to cover the cost of your child's college education? 

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  • Annual rate of interest you must earn on your investment = 10.56%

Step-by-step explanation

Annual rate of interest you must earn on your investment = (Future Value/Present Value)^(1/n)-1

Annual rate of interest you must earn on your investment = (390000/64000)^(1/18)-1

Annual rate of interest you must earn on your investment = 10.56%