Question

jillian currently has $500 in an account with an annual rate of return of 4.3%. she has set a goal to travel and would like to have $3000 for a trip to hawaii when she graduates in 4 years. how much will she have to save each month to afford her trip?

Answer 1

Jillian currently has $500 in an account with an annual rate of return of 4.3%.She needs to save $46.07 each month for the trip to Hawaii

The $500 in her account will grow to =500*(1+0.043)^4 = 591.71

So she has to save 3000-591.71 = 2,408.29

The 2,408.29 becomes the FV and we have to calculate the PMT with a monthly rate of 0.043/12 and nper = 4*12 =48. We use the PMT function of excel

So she needs to save each month =PMT(rate,nper,pv,fv)  in excel = PMT(0.043/12,48,0,2408.29) = 46.07

So she needs to save $46.07 each month for the trip to Hawaii

Rate of return is a profit on funding. It accommodates any trade in value of the investment, and/or cash flows which the investor gets from that funding, which include interest payments, coupons, coins dividends, inventory dividends or the payoff from a spinoff or based product.

Learn more about rate of return here:brainly.com/question/24301559
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