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##### College Tuition Investment Example

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Question;College Tuition Investment Example;A grandmother is looking for a plan to finance her new grandchild?s college;education. She has \$45,000 to invest. Search the internet and locate a;long-range investment plan, CD, Savings Bond, etc. for the grandmother. The;plan is to earn compound interest.;Calculate the future value of the investment. You must use the advertised;interest rate, the number of compounding periods per year, and the time the;funds will be invested. If you are not given the number of compounding;periods a year, use monthly compounding.;1. The principal is \$45,000. This is P.;2. Research the annual interest rate for your investment. This is r.;3. State the time in years for the investment (as in when the new grandchild;will be attending college). This is t.;4. State the number of compounding periods per year. This is n.;5. Model the future value of Grandma?s investment as an exponential;function, with time as the independent variable: F(t) = P(1 + r/n);nt;6. Show all intermediate calculations and state the future value of;Grandma?s investment.;7. Use the Internet or library resources to find the average cost of a;college education today, will grandma?s investment be able to cover the cost in;today?s dollars, what about in the future?;8. What other costs, besides tuition, might be incurred by the college-bound;grandchild?;9. How much would grandmother have to invest, and at what compound interest;rate and terms would the grandmother have to invest this money to fully cover;the grandchild?s college experience? Show how you determined these values.;10. Summarize your findings in writing using proper style and grammar.;Include references formatted according to APA style for investment;information and college costs information.

Paper#54909 | Written in 18-Jul-2015

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