We can use the formula for the future value of an annuity:
FV = PMT * [(1 + r/n)^(n*t) - 1] / (r/n)
where FV is the future value, PMT is the monthly deposit, r is the annual interest rate, n is the number of compounding periods per year, and t is the number of years.
Plugging in the given values, we get:
145157 = PMT * [(1 + 0.068/12)^(12*19) - 1] / (0.068/12)
Solving for PMT, we get:
PMT = 145157 * (0.068/12) / [(1 + 0.068/12)^(12*19) - 1]
PMT ≈ $292.14
Therefore, you should deposit approximately $292.14 each month to reach a college fund value of $145,157 after 19 years, assuming an interest rate of 6.8% compounded monthly.
You intend to create a college fund for your baby. If you can get an interest rate of 6.8% compounded monthly and want the fund to have a value of 145,157 after 19 years, how much should you deposit each month? Round to the nearest cent.
1 answer