Solve the problem.
-Mark and Kate are establishing a fund for their son's college education. What lump sum must they deposit in an account that gives $7 \%$ annual interest rate, compounded monthly, in order for them to have $\$ 70,000$ in the fund at the end of 10 years?
A) $\$ 34,831.74$
B) $\$ 37,151.74$
C) $\$ 39,407.74$
D) $\$ 36,131.74$

Question

Quizplus · Accepted Answer

The formula for compound interest is $ P = \frac{A}{(1 + \frac{r}{n})^{nt}} $. Here, $ A = 70,000 $, $ r = 0.07 $, $ n = 12 $, $ t = 10 $. Plugging in these values gives $ P = \frac{70,000}{(1 + \frac{0.07}{12})^{120}} \approx 34,831.74 $.

Solve the Problem 7%7 \%7% Annual Interest Rate, Compounded Monthly, in Order for Them to for Their

Solve the Problem $7 \%$ Annual Interest Rate, Compounded Monthly, in Order for Them to for Their