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# compute the monthly payment

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Discuss the forward rate and saving for college. See attached file for full problem description.

https://brainmass.com/economics/banking/forward-rate-saving-for-college-129131

#### Solution Preview

Before we start, I think it helpful that we go over all the formulae that is needed in the computation:
Let FV = future value, PV = present value, N = number of periods (year, quarter, month...)
R = interest rate, PMT = payment per period

Here are the formulae that we need:
1. FV = PV * (1+R) ^ N
where " ^ " means to the power of.

For payments, we have FV = PMT*(1+R) + PMT*(1+R)^2 + ... + PMT*(1+R)^t + ... + PMT*(1+R)^N
where t = the t-th payment.
Then the sum of all the payments is, by using the results from the first question:
FV = PMT [(1+R)^N - 1] / R
Of course, you do ...

#### Solution Summary

Assistance is given to compute the monthly payment.

\$2.19