Question 1037038: Your baby is born, and you want to make monthly payments into a college fund over the next 18 years. Your goal is to have $85,000 in the fund in 18 years. Assuming an APR of 5%, calculate how much you should deposit monthly?
Found 2 solutions by addingup, MathTherapy:
Answer by addingup(3677)   (Show Source):
You can put this solution on YOUR website! how often does the money compound? Just once a year?
If that's the case:
A = PMT[(1+r/n)^nt-1]/(r/n)
In this formula:
A = Amount at the end of year 18, 85,000
PMT = Monthly payments
r = rate of interest
n = number of periods (e.g., if interest is paid every six months it would be 0.05/2)
t = time, 18 years
85,000 = PMT[(1+0.05)^18-1]/0.05
85,000 = PMT*28.13
85,000/28.13 = 3021.69 per year
3021.69/12 = 251.75 per month
Answer by MathTherapy(10557)  (Show Source):
You can put this solution on YOUR website!
Your baby is born, and you want to make monthly payments into a college fund over the next 18 years. Your goal is to have $85,000 in the fund in 18 years. Assuming an APR of 5%, calculate how much you should deposit monthly?
Use formula for the PERIODIC PAYMENTS on the FUTURE VALUE of an annuity, or: 
This should give you: 
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