you are going to save and buy a home. How much do you need to invest now to have a down payment of $40,000 if you have 10 years to save and

Since you earning 16% compounded monthly, then you have a monthly interest rate of 16/12 or 1 1/3%. We take this rate & divide by 100 & we get .013333333.....     (1)

Then take (1) above and add 1 to it or 1.013333333                                (2)

Then we have the future value of $40,000 which must be discounted........(3)

Then PV(present value)= FV(future value)/ (1.01333333^120) or

$40,000/4.900940.... =$8,161.70, which is the amount you must have today.