Question

Kaylee wants to go to Texas A&M where the tuition is $12,000 per year. She has a scholarship that pays for 30% of the tuition for the first year. How much will Kaylee have to save monthly to cover the rest of her tuition if she saves for 2 years? *

Answer 1

Monthly deposit= $323.78

Explanation:

Giving the following information:

Future Value (FV)= 12,000*0.7= $8,400

Number of periods (n)= 2*12= 24

We weren't provided with the interest rate, suppose an annual interest rate of 8%.

Interest rate= 0.08/12= 0.00067

Now, to calculate the monthly deposit, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= monthly deposit

Isolating A:

A= (FV*i)/{[(1+i)^n]-1}

A= (8,400*0.0067) / [(1.0067^24) - 1]

A= $323.78