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just olya [345]
3 years ago
15

Mark and Mindy are new parents. They wish to start saving for their son’s college education. They anticipate they’ll need $150,0

00 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?
Business
1 answer:
Reika [66]3 years ago
6 0

Answer:

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

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