Chapter 2.4, Problem 4E

Your Child’s Education You want to begin making regular deposits to finance your child’s

college education 18 years (216 months) in the future. You are able to invest $200 at the end

of each month, and you judge that $100, 000 will be needed. That is, you want the future

value F of the investment to be $100, 000. Whether you can attain that goal depends on

interest rates. If the monthaly interest rate is r as a decimal, then the future value of the

investment is given by

$F= \frac{200}{r} ({\left(1+r\right)}^{216}-1)$ dollars.

a. Plot the graph of F along with the target value of $100, 000. Use a horizontal span of 0 to 0.01.

b. Fina the monthly rate r that will yield the dsired future value of $100, 000. Round your answer as a percentage to one decimal place.

c. What is your total investment in your child’s education?