Mark and Mindy are new parents. They wish to start saving for their son's college education. They anticipate they'll need $150,000 in 18 years. How much should they deposit quarterly in an account that pays 7.75% per year compounded quarterly, to have the desired funds in 18 years?

Quarterly deposit = $1,001.06

Explanation:

Giving the following information:

They anticipate they'll need $150,000 in 18 years. The account pays 7.75% per year compounded quarterly.

To calculate the annual deposit, we need to use the following formula:

FV = {A*[ (1+i) ^n-1]}/i

A = annual deposit

Isolating A:

A = (FV*i) / {[ (1+i) ^n]-1}

FV = 150,000

n = 18*4 = 72

i = 0.075/4 = 0.01875

A = (150,000*0.01875) / [ (1.01875^72) - 1] = $1,001.06