Use the savings plan formula to answer the following question your goal is to create a college fun for your child suppose you find a fund that offers an apr of 7% how much should you deposit monthly to accumulate $87000 in 14 years?

The monthly deposit to reach the goal should be of $507.21

Explanation:

Giving the following information:

Interest rate = 7% annual

deposit = monthly

Final value = $87000

n = 14 years

To calculate the monthly deposit, we need to use the following variation of the future value formula:

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

A = monthly deposit

Isolating A:

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

i = 0.07/12 = 0.00583

n = 14*12 = 168

A = (87,000*0.00583) / [ (1.00583^168) - 1]

A = $507.21

The monthly deposit to reach the goal should be of $507.21