Suppose that a family wants to start a college fund for their child. If you can get an APR of 7.5% and want the fund to have a value of $75,000 after 18 years, how much should you deposit monthly? Assume an ordinary annuity.

a.

$164.98

c.

$166.21

b.

$165.30

d.

$167.52

Question

Mathematics

Thalia Fischer

30 June, 23:21

Suppose that a family wants to start a college fund for their child. If you can get an APR of 7.5% and want the fund to have a value of $75,000 after 18 years, how much should you deposit monthly? Assume an ordinary annuity.

a.

$164.98

c.

$166.21

b.

$165.30

d.

$167.52

+4

Answers (1)

Know the Answer?

Faith Clements · Answer 1

The APR is 7.5%. This is a nominal rate. The effective rate is

0.075/12 = 0.00625

The term is

18 (12) = 216 months

The ordinary annuity would be

A = F i / [ (1 + i) ^n - 1]

A = 75000 (0.00625) / [ (1 + 0.00625) ^216 - 1]

A = 164.98

The answer is

a. $164.98

Suppose that a family wants to start a college fund for their child. If you can get an APR of 7.5% and want the fund to have a value of $75,000 after 18 years, how much should you deposit monthly? Assume an ordinary annuity.a.$164.98c.$166.21b.$165.30d.$167.52

Suppose that a family wants to start a college fund for their child. If you can get an APR of 7.5% and want the fund to have a value of $75,000 after 18 years, how much should you deposit monthly? Assume an ordinary annuity.

a.

$164.98

c.

$166.21

b.

$165.30

d.

$167.52