Answer:
22 months
Explanation:
The 20% down payment which is target savings =$165,000*20%=$33,000
The are two paychecks which is $1,400 each
monthly savings is one paycheck=$1,400
rate of compounding is 7.83% yearly=7.83%/12=0.006525 monthly
The number of months the savings will reach $33,000 can be computed using the nper formula in excel as shown below:
=nper(rate,pmt,-pv,fv)
rate is the monthly rate i,e 0.006525
pmt is the monthly savings of $1,400
pv is the present worth of the savings which is unknown
fv is the future value of target savings which is $33,000
=nper(0.006525,-1400,0,33000)=22 months approximately
