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A father wants to set aside money for his 8-year-old daughter's future education, by making monthly deposits to a bank account that pays 9% per year, compounded annually. What equal monthly deposits must the father make the first 1 month after her 9th birthday and the last on her 17th birthday-in order for her to withdraw $2000 on each of her next 6 birthdays? Express your answer in whole number.

User Mindeh
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To set aside money for his daughter's future education, the father needs to make equal monthly deposits to a bank account. The deposits will start 1 month after her 9th birthday and continue until her 17th birthday. The goal is for her to withdraw $2000 on each of her next 6 birthdays.

To calculate the monthly deposits, we need to consider the time period, interest rate, compounding frequency, and the desired future value. The time period is 8 years, or 96 months. The interest rate is 9% per year, compounded annually, which means we have a monthly interest rate of 0.75%. The desired future value is $12,000 ($2000 per year for 6 years).

Using the formula for the future value of an ordinary annuity, we can find the monthly deposits needed. Plugging in the values, we get a monthly deposit of approximately $104.

Therefore, the father should make equal monthly deposits of $104 to the bank account in order for his daughter to withdraw $2000 on each of her next 6 birthdays.
User ThommyB
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