Assume conservative nominal annual investment rate

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Reference no: EM131307835

Since my daughter will arrive soon, I would like to set up a regular payment into an interest bearing account that will allow my daughter to attend college with little or no debt. My estimate is that I will need to have $50, 000 by the time she is 18 years old. I will assume a conservative nominal annual investment rate of 2.5%. I would like to find a regular payment that is reasonable for me to achieve this goal. Assume that the payments occur MONTHLY while the compounding could be:

a. MONTHLY (12 in a year for all 18 years).

b. BONUS WEEKLY (52 in a year for all 18 years).

HINT: My goal is the future value of an ordinary annuity, and as a bonus I’m curious if weekly compounding will make much of a difference.

Reference no: EM131307835

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