# 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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