Following the birth of a child a parent wants to make an ini

Following the birth of a child, a parent wants to make an initial investment P0 that will grow to $60,000 for the child\'s education at age 18. Interest is compounded continuously at 7%. What should the initial investment be? Such an amount is called the present value of $60,000 due 18 years from now.

What is the present value?

Please show steps to solving this.

Solution:

Present Value = Present Value of Annuity of 18th year @7%* 60000

= 0.27651 * 60000

= 16590.6

$Following the birth of a child, a parent wants to make an initial investment P0 that will grow to $60,000 for the child\'s education at age 18. Interest is comp$

Following the birth of a child a parent wants to make an ini

Solution

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