Homework Answers
Answer:
Question 1)
Given
Interest rate R=4.8%
monthly interest rate r=4.8%/12=0.4%
Number of payments n=24
Monthly installment A=500
Number of years after which college start N=3 years
Let X be the amount kept aside
So FV of deposit = PV of Monthly installment
X*(1+R)^N=A*(1-(1+r)^-n)/r
X*(1+4.8%)^3=500*(1-(1+0.4%)^-24)/0.4%
X=$9921.83
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