Continuous Rate?

A bank account earn 10% interest compounded continuously. At what constant, continuous rate must parents deposit money into such an account in demand to save $100,000 in 10 years for a child's college expenses?

Answers:    No FDIC insured sandbank account that I know of currently earns 10% interest. Most 5 year CD rates are in close proximity 4%. There are some foreign based bank accounts that own rates near 10%, but to earn that rate, you will have currency risk that could rationale you to lose your principal.

As a pure academic exercise, you can find the answer by using an HP calculator. You can also use a mortgage calculator on many websites, as the problem is the inverse of paying past its sell-by date a $100,000 mortgage at 10% in 10 years. By entering those numbers, it will tell you the monthly "payment" you must kind. However, this does not take taxes into consideration. Bank interest is taxable.


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