Show formulas and calculations A baby’s grandparents want to set up an Education Savings Plan when she’s born. They want

[answerhappygod]

Show formulas and calculations
A baby’s grandparents want to set up an Education Savings Plan when she’s born.
They want their investment to be worth $40,000 by the time the child is 18 years old.
They will invest in a GIC (Guaranteed Investment Certificate) that earns 3.5% interest per annum, compounded quarterly.
How much do they have to invest when the baby is born to reach their goal?
check the answer
PART 2 Compound Interest on a lump sum 14 QUESTION 2 - Show formulas and calculations A baby's grandparents want to set up an Education Savings Plan when she's born. They want their investment to be worth $40,000 by the time the child is 18 years old. They will invest in a GIC (Guaranteed Investment Certificate) that earns 3.5% interest per annum, compounded quarterly. How much do they have to invest when the baby is born to reach their goal? Future Value = 40000 FV to find present Value = (1h+r)periods 3.5% rate of interest = = = 0.75% # of period 18 4 = 72 . 40000 present Value = (1+0.8750 %) 40000 0.534053251=21362.13