If Dean puts $3427.20 in a money market account at 2.46%, how much does he have to deposit monthly to get to $28560 in 5 years?
Please let me know the formula used.
This is the formula you would use to calculate the monthly payment:
-P*[(1-(1+R)^-N)/(R)]+FV*(1+(R))^-N-PV=0, where P=PMT, R=Interest Rate, N=number of periods, FV=Future Value, PV=Present Value.
-P*[(1-(1+0.0246/12)^-60)/(0.0246/12)]+28560*(1+(0.0246/12))^-60-3427.20=0, solve for P
Solve for P:
21830.55 - 56.4024 P = 0 subtract 21830.55 from both sides
-56.4024P = - 21830.55 divide both sides by - 56.4024
P = Payment = - 21830.55 / -56.4024
Payment = $387.05 - Monthly deposit that must be made for 60 months.
