Respuesta :
Answer:
6.5017%
Explanation:
Given that,
Total cost of a college education when your child enters college in 16 years, Future value = $200,000
Amount today to invest, present value = $73,000
Time period = 16 years
Therefore,
Annual rate of interest:
[tex]FV=PV(1+r)^{t}[/tex]
[tex]200,000=73,000(1+r)^{16}[/tex]
[tex]r =(\frac{200,000}{73,000})^{\frac{1}{16}}-1[/tex]
r = 6.5017%
Therefore, the annual rate of interest you must earn on your investment to cover the cost of your child’s college education is 6.5017%.
