Question

The germane family has found the perfect house in thessaloniki, greece that they would like to use for their summer vacation. to purchase this $1,000,000 beach house, their bank requires a 40% down payment, which the germane family plans to have saved 5 years from now. they earn $8,000 per month, and their savings account earns 6% interest compounded monthly. what amount must be saved each month?

Answer 1

Answer:

Saving each month is $5733.12

Explanation:

The down payment amount = $1000000 × 40% = $400000

The per month earning = $8000

The earning from saving account = 6%

We have to find the amount that will be saved per month by using the above information.

Interest rate per month = 6% / 12 = 0.5% or 0.005  

Number of periods = 6 ×12 = 60

Future value of annuity = $400000

Saving each month = FV / ([(1+r)^n-1] / r)

Saving each month = 400000 / (((1 + 0.50%)^60 – 1)/ 0.50%

Saving each month = 5733.12