Answered

Welcome to Westonci.ca, your ultimate destination for finding answers to a wide range of questions from experts. Our platform provides a seamless experience for finding precise answers from a network of experienced professionals. Get detailed and accurate answers to your questions from a dedicated community of experts on our Q&A platform.

Soojeong estimates that it is going to take $180,000 to send her new born baby to college. She would like to start an annuity so that she can have $180,000 after 18 years. If the account earns 5.5% interest compounded monthly, how much must she put in each month?

Sagot :

facundobuzzetti

Answer:

Monthly deposit= $489.59

Step-by-step explanation:

Giving the following information:

Future Value (FV)= $180,000

Number of periods (n)= 18*12= 216

Interest rate (i)= 0.055 / 12= 0.004583

To calculate the monthly deposit, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= monthly deposit

Isolating A:

A= (FV*i)/{[(1+i)^n]-1}

A= (180,000*0.004583) / {[(1.004583)^216] - 1}

A= $489.59

We appreciate your time on our site. Don't hesitate to return whenever you have more questions or need further clarification. Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. We're dedicated to helping you find the answers you need at Westonci.ca. Don't hesitate to return for more.