Ask Question
26 June, 04:09

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?

+1
Answers (1)
  1. 26 June, 04:35
    0
    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
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “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 ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers