For their son's college fund, the parents need to put a lump sum deposit of about $7.830 into an account earning 13%, compounded monthly, so that it will increase to $100,000 in 17 years.
Using compound interest formula the deposit is :
P A/ (1+ r/n)nx where, P principal, Amount=A = 70,000, X = time = 13 years n = 17, Rate = r = 13% = 0.13
Therefore,
P 70,000 / (1+0.13/12)^12x17= 7,830 Where A is the total amount, P denotes the principal (the initial sum of money), r denotes the interest rate (in decimal form), n denotes the frequency with which interest is compounded annually, and t denotes the length of time the money has been invested or borrowed in years.
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