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Part 1
Use the savings plan formula to answer the following question.
Your goal is to create a college fund for your child. Suppose you find a fund that offers an APR of 6 %. How much should you deposit monthly to accumulate ​
  
enter your response here each month.
​(Do not round until the final answer. Then round to two decimal places as​ needed.)

Ask by Ford Colon. in the United States
Nov 07,2024

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$21,688.72

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Extra Insights

To figure out how much you need to invest each month to reach your goal, you’d typically use the future value of an annuity formula. In your case, you want to accumulate $84,000 over 18 years with a 6% annual interest rate. If we break it down, you’ll want to ensure that your monthly deposits, compounded monthly, will help you reach that magical number!
In practical terms, this exercise teaches valuable lessons about the power of consistent saving and compounding interest. By starting early and maintaining a steady deposit schedule, you can turn small, manageable investments into significant funds over time. So, don’t underestimate the value of those monthly deposits—they can set your child up for a wonderful education!

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