Question

A graduating high school student decides to take a year off and work to save money for college. The student plans to invest all money earned in a savings account earning 6% interest, compounded quarterly. The student hopes to have $5000 by the time school starts in 12 months. How much money will the student have to save each month

Answer 1

Answer:

amount = 407 per month

Step-by-step explanation:

given data

future value = $5000

interest rate = 6% = $\frac{0.06}{4}$ = 0.015

time = 12 months = 4 compound per year

solution

we use here formula that is

amount = future value × $\frac{r}{(1+r)^t-1}$   .......................1

put here value and we get

amount = 5000 × $\frac{0.015}{(1+0.015)^{4}-1}$  

amount = 1222 per quarter

or amount = 407 per month