Jim and dianna want to save for their child’s college expenses. they find an annuity that pays 6% annual interest, compounded monthly.
if they invest in this annuity by contributing $300 per month for 10 years, how much money will they have for the college expenses?

future value = $49163.8

so required amount will be $491200 nearest $100

Step-by-step explanation:

given data

annual interest rate = 6 %

annuity = $300 per month

time period = 10 years

to find out

how much money will they have for the college expenses

solution

we know that effective rate will be

effective rate =

effective rate = 5 ×

number of payment = 12 × 10 = 120

so future value will be express as

future value = annuity ×   .........1

future value = 300 ×

future value = 300 × 163.8793  

future value = $49163.8

so required amount will be $491200 nearest $100

450

step-by-step explanation:

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