How much should Mr. and Mrs. Reyes deposit if they want to have Php 800,000 that will be used for their son’s college education after graduating senior high school at age 17 years old. If Mr. and Mrs. Reyes will deposit the said amount in a bank that pays 1.2% interest compounded annually at the time when their son’s age is 5 years old?

To determine how much Mr. and Mrs. Reyes need to deposit today in order to have Php 800,000 in 12 years (when their son turns 17), we can use the formula for future value with compound interest:

\[
FV = P(1 + r)^n
\]

Where:
- \( FV \) = future value (Php 800,000)
- \( P \) = present value (the amount to deposit today)
- \( r \) = annual interest rate (1.2% or 0.012)
- \( n \) = number of years until the future value is needed (12 years)

Rearranging the formula to solve for \( P \):

\[
P = \frac{FV}{(1 + r)^n}
\]

Now, we can plug in the values:

\[
P = \frac{800,000}{(1 + 0.012)^{12}}
\]

Calculating:

1. Calculate \( (1 + 0.012)^{12} \):

\[
(1 + 0.012)^{12} \approx 1.148882
\]

2. Calculate \( P \):

\[
P \approx \frac{800,000}{1.148882} \approx 696,613.53
\]

Therefore, Mr. and Mrs. Reyes should deposit approximately **Php 696,613.53**.

### Do you want details or have any questions? 

Here are some follow-up questions:

1. What are the benefits of compound interest versus simple interest?
2. How would a different interest rate affect the required deposit?
3. What other investment options might provide higher returns?
4. Can they achieve their goal with a lower initial deposit by extending the time period?
5. What factors should they consider when choosing a bank for savings? 

**Tip:** Regularly review savings and investment plans to ensure they are aligned with your financial goals.

How much should Mr. and Mrs. Reyes deposit if they want to have Php 800,000 that will be used for their son’s college education after graduating senior high school at age 17 years old?

Discover how Mr. and Mrs. Reyes can determine the necessary deposit for their son's college education fund of Php 800,000. This solution involves the calculation of present value using compound interest at an annual rate of 1.2%. Ideal for Grades 9-12 students.

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