Answer:
- $223.84 at the end of the month, or
- $223.31 at the beginning of the month
Step-by-step explanation:
The annuity formula is used for this.
A = P((1+r/12)^(12t) -1)/(r/12)
gives the balance A resulting from payments P being compounded monthly at annual rate r. (Payments are made at the end of the month.)
50,000 = P((1 +.028/12)^(12·15) -1)/(0.028/12) ≈ 223.378772P
P ≈ 50,000/223.378772 ≈ 223.84
To achieve the desired balance, Tometeo must deposit $223.84 at the end of every month.
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If Tometeo makes his deposits at the beginning of the month, then the amount is less by the interest earned for the month:
$223.84/(1 +.028/12) ≈ $223.31 . . . . beginning of the month deposit amount
