When Your First Child Is Born, You Begin to Save

question 88

Multiple Choice

When your first child is born, you begin to save for college by depositing $700 per month in an account paying 12% interest per year. You increase the amount you save by 2% per year. With continuous investment and compounding, how much will you have accumulated in the account by the time your child enters college 18 years later?

• A)$5,945,936.09
• B)$6,079.76
• C)$70,114.89
• D)$607,975.89
• E)$7,073.13

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Definitions:

Sliding

A term often used in various contexts to describe a gradual, steady movement or shift from one position or condition to another.

Accounting Cycle

A sequence of steps undertaken in a specific order by businesses to handle their financial transactions from their inception to their inclusion in the financial statements.

Recording Journal Entries

The process of documenting all financial transactions of a business in the double-entry accounting system through debits and credits.

Posting

The act of recording financial transactions in the appropriate ledger accounts as part of the accounting process.