Question

Mr. and Mrs. Tournas know that their son will attend a college, in 14 years, that they estimate to cost approximately $250,000. How much should they deposit now if they assume that they can earn 8.5% compounded annually?

a) $72,083.41
b) $76,055.32
c) $75,450.20
d) $79,785.45

Answer 1

Answer: D

Explanation:

We will try it to determine how much the need to save using the exponential function. In an exponential function,we need the start up amount and the common difference.

We know that the common difference is is 1.085 because if they will earn 8.5% interest plus 100% .

So 1.085 raised to the number of years times a number has to equal 250,000

x * 1.085^14 = 250,000 now solve for x

3.13340357495x = 250,000

x = 79785.44544 Rounded to the nearest cent is $79785.45