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How much money your friends need to put into their savings

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Question - Some friends of yours have just had a child. Thinking ahead, and realizing the power of compound interest, they are considering investing for their child's college education, which will begin in 18 years. Assume that the cost of a college education today is $150,000. Also assume there is no inflation and no tax on interest income used to pay college tuition and expenses.

Required - If the interest rate is 7 percent, how much money will your friends need to put into their savings account today to have $150,000 in 18 years?

Reference no: EM133175094

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