Question

just need the correct answer

Grandparents plan to open an account on their grandchild's birthday and contribute each month until she goes to college. How much must they contribute at the beginning of each month In an investment that pays 11%, compounded monthly, if they want the balance to be $160,000 at the end of 18 years? (a) state whether the problems relates to an ordinary annuity or an annuity dur. O ordinary anvity annuity due (1) Solve the problem (round anwer to the nearest cont.) $12345 X

Answer 1

N 18. Bolonce to be mode A $160,000 period years. Rote interest R = 11%. Compounded monthly Amount to be contributed per month =$P of (a). The problem relates to : • Anricity due Annuity due in due on each month as well so connenty whose payment is immediately est The beginning of each each period. gon given problems also payment payment is due in the beginning of it is related to Annuity die (b). Now the payment to be made at beginning of each geven where rate compounded me monthly month M interest in P + R% 100X12 here N = 18812 R = 1191 A = 160,000 Substitute values of A, RN, in the formule get, 18812 160000 P 100812 216 160000 P 1+ 11 1200 216 160000 el It 00917

160000 P ( 1.00917) 21 160000 px 8.05 160000 a 8.05 or P = $19,875.78 $ 19.900 (After sounding off to required Contribution which monthly for 18 years. merest akt) be made This is us to