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Janine is 21 years old. She opens an account that pays 1.25% interest, compounded monthly. She sets a goal of saving $10,000 by the time she is 24 years old. How much must she deposit each month?

 Sep 11, 2023

Best Answer 

 #1
avatar+36745 
+1

If she deposits at the beginning of the month, this becomes and ANNUITY DUE calculation...here is the formula :

Pluggin' in the numbers    FV = $ 10 000   

                                           i = decimal interest per period  = .0125/ 12 months   

                                          n = number of periods = 3 x 12 = 36 months  ( when she is 24)

    then solving for "C"       results in   C = $ 272.46  per month

     

 Sep 11, 2023
 #1
avatar+36745 
+1
Best Answer

If she deposits at the beginning of the month, this becomes and ANNUITY DUE calculation...here is the formula :

Pluggin' in the numbers    FV = $ 10 000   

                                           i = decimal interest per period  = .0125/ 12 months   

                                          n = number of periods = 3 x 12 = 36 months  ( when she is 24)

    then solving for "C"       results in   C = $ 272.46  per month

     

ElectricPavlov Sep 11, 2023

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