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in order to save for your child's college education, you want to save $500 every month...

in order to save for your child's college education, you want to save $500 every month for 20 years, starting one month from now. The monthly interest rate on your savings account is 0.8%. How much money will you have in your account in 20 years?

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Expert Solution

The value of account after 20 years can be calculated as future value of annuity

FV of annuity = Deposit * ((1 + R)^N - 1)/R

where Deposit = 500

N = 20*12 = 240

R = 0.8%

FV = 500 * ((1+0.8%)^240-1)/0.8%

= 500*721.131219

= 360565.61

jeff jeffy answered 2 years ago
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