you are saving for your child's college.. there are 15 years before they will be in college. you have saved 0 so far. Your goal is $98,000. assume annual in rate is 8%. how much must you save at the end of each year in equal amounts to reach your goal? I know that with the hp10bII calc I am using, I would use 15N, 8 I/Yr, $98,000FV. I am just not sure if I am coming up with the correct payment though.

Question

you are saving for your child's college.. there are 15 years before they will be in college. you have saved 0 so far. Your goal is $98,000. assume annual in rate is 8%. how much must you save at the end of each year in equal amounts to reach your goal? I know that with the hp10bII calc I am using, I would use 15N, 8 I/Yr, $98,000FV. I am just not sure if I am coming up with the correct payment though.

Answer 1

i = .08

n = 15

paym( 1.08^15 - 1)/.08 = 98000
paym = 98000/27.15211393 = $3609.30

Answer 2

To calculate the amount you need to save at the end of each year in order to reach your goal, you can use the present value of an ordinary annuity formula, given the future value, interest rate, and number of periods.

Let's break it down step by step:

1. Determine the future value (FV) and the interest rate (I/Yr):
- FV = $98,000 (your goal)
- I/Yr = 8% (annual interest rate)

2. Calculate the present value of the annuity (PMT) using the formula:
PMT = FV / [(1 + I/Yr)^N - 1]
- N = 15 (number of years)

Plugging in the values:
PMT = $98,000 / [(1 + 0.08)^15 - 1]

Now, let's calculate it using a calculator:

$98,000 / [(1.08)^15 - 1] = $4,210.55

So, you would need to save approximately $4,210.55 at the end of each year for the next 15 years in equal amounts to reach your goal of $98,000.

It's important to note that the calculations may vary slightly depending on the financial calculator or software you're using, but the general principles remain the same.