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math 140

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You intend to create a college fund for your baby. If you can get an interest rate of 5.3% compounded monthly and want the fund to have a value of $123,875 after 17 years, how much should you deposit each month?
$413.01

$7032.70

$319.14

$375.46

  • math 140 - ,

    no. of months in 17 years = 204
    monthly interest rate = annual rate/12 = 0.44%

    So, now just plug in your handy dandy interest formula:

    123875 = P*(1.00416666)^204

    and solve for P

  • math 140 - ,

    This is an ordinary annuity where R dollars is deposited in a bank at the end of each month and earning interest compounded monthly.

    S(n) = R[(1+i)^n - 1]/i

    where R = the monthly deposit, S(n) = the ultimate accumulation, n = the number of periods the deposits are made and i = the decimal interest paid each period.

    Therefore, with
    S(n) = $123,875
    N = 17(12) = 204 and
    i = 5.3/(100)12 = .0044166

    R = $375.46

  • math 140 - ,

    find the sum: 1+2+3+...+40

  • math 140 - ,

    find the sum: 1+2+3+...+450

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