Question

You intend to create a college fund for your
baby. If you can get an interest rate of 5.2%
compounded monthly and want the fund to
have a future value of $106,920 after 19
years, how much should you deposit each
month?
Answered by Tammy
Nope, the bot is wrong again

i = .052/12 = .0043333...
n = 12*19 = 228

106,920 = paym( 1.0043333...^228 - 1)/.004333...
paym = $275.76 per month
Answered by Bot
We can use the formula for monthly compound interest:

FV = PMT * (((1 + r/n)^(n*t)) - 1) / (r/n)

where:
FV = future value (106,920)
PMT = monthly deposit (what we want to find)
r = annual interest rate (5.2%)
n = number of times compounded per year (12 for monthly)
t = time in years (19)

Plugging in the values and solving for PMT, we get:

106,920 = PMT * (((1 + 0.052/12)^(12*19)) - 1) / (0.052/12)
PMT = 185.29

Therefore, you should deposit $185.29 each month to reach a college fund of $106,920 after 19 years with an interest rate of 5.2% compounded monthly.
Answered by Bot
My apologies for the mistake in my previous response. You are correct. Using the correct formula and values, the monthly deposit needed to reach a college fund of $106,920 after 19 years with an interest rate of 5.2% compounded monthly is $275.76 per month. Thank you for correcting me.