Ask Question
29 August, 09:40

Use the savings plan formula to answer the following question your goal is to create a college fun for your child suppose you find a fund that offers an apr of 7% how much should you deposit monthly to accumulate $87000 in 14 years?

+4
Answers (1)
  1. 29 August, 09:42
    0
    The monthly deposit to reach the goal should be of $507.21

    Explanation:

    Giving the following information:

    Interest rate = 7% annual

    deposit = monthly

    Final value = $87000

    n = 14 years

    To calculate the monthly deposit, we need to use the following variation of the future value formula:

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

    A = monthly deposit

    Isolating A:

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

    i = 0.07/12 = 0.00583

    n = 14*12 = 168

    A = (87,000*0.00583) / [ (1.00583^168) - 1]

    A = $507.21

    The monthly deposit to reach the goal should be of $507.21
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Use the savings plan formula to answer the following question your goal is to create a college fun for your child suppose you find a fund ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers