Answer:
$5,605.79
Explanation:
Given that,
Amount of money wish to accumulate in a child’s college fund after 18 years, future value = $200,000
Annual rate of interest, i = 7.5%
Annual payments, t = 18 years
Future value of ordinary annuity = [tex]P(\frac{(1+i)^{t}-1 }{i})[/tex]
[tex]200,000=P(\frac{(1+0.075)^{18}-1 }{0.075})[/tex]
P = $5,605.7915 or $5,605.79 (Approx)
Hence, payments of $5605.79 needs to be made into the account if $200000 needs to be accumulated.
