Willie deposits a fixed monthly amount into an annuity account for his child’s college fund. He wishes to accumulate a future value of $125,000 in 15 years.Assuming an APR of 3.5% how much money should Willie deposit monthly in order to reach his goal.How much of the $125,000 will Willie ultimately deposit in the account, and how much is interest earned?

Here, to calculate the monthly contribution we have to use the formula of future value of annuity.…

Answered: Willie deposits a fixed monthly amount…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 15E

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Willie deposits a fixed monthly amount into an annuity account for his child’s college fund. He wishes to accumulate a future value of $125,000 in 15 years.

1. Assuming an APR of 3.5% how much money should Willie deposit monthly in order to reach his goal.
2. How much of the $125,000 will Willie ultimately deposit in the account, and how much is interest earned?

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