Suppose that a family wants to start a college fund for their child. If you can get an APR of 7.5% and want the fund to have a value of $75,000 after 18 years, how much should you deposit monthly? Assume an ordinary annuity.

For an ordinary annuity, use the future-value formula solved for the monthly deposit: deposit = 75,000 × r ÷ [(1 + r)^n − 1]. The monthly rate is 0.075 ÷ 12 = 0.00625, and there are 18 × 12 = 216 deposits, so the deposit is about $164.98 per month. The correct choice is $164.98.

AI-written and checked against the verified answer.