Find minimum annual interest rate on saving account

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Reference no: EM132136689

Question: Parents decided to set aside money for their child's higher education. The objective is to provide $35,000 in today's dollars after 17 years. Their financial analyst forecasted that the average annual inflation to be 3.8% for the next 17 years. A bank offered an educational saving account with fixed interest rate for the next 17 years. The parents will deposit one sum of money now and it is to be cashed to benefit the child after 17 years. If the amount of money available now for deposit is $50,000, what is the minimum annual interest rate on the educational saving account so that the parents can achieve their objective?

Reference no: EM132136689

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