compound interest

Question

Parents wish to have $150,000 available for a child's education. If the child is now 7 years old, how much money must be set aside at 3% compounded semiannually to meet their financial goal when the child is 18

Answer 1

This is a Present Value problem.

 

Do the following, to get the correct answer:

 

(150000)/[(1 + 0.03/2)^{11 x 2 = 22}

 

So, this is:  150,000 /1.387563699, which is:  $108,103