Question

In order to save $57,000 in five years, John will start saving money next month. He already has $10,000 in his account. The account is paying him 0.1 percent interest per month. In order to have $57,000 in five years, how much will he have to deposit into that account each month?

Answer 1

Answer:

He has to deposit $750.46 every month into the account

Explanation:

Future value id the accumulated amount of principal and compounded interest at the end of a specific investment period.

Assuming interest is compounding every month, use following formula to calculate the amount of payment each month.

FV = PV x ( 1 + r )^n + A x ( ( 1 + r )^n - 1 ) / r

$57,000 = $10,000 x (1+0.1%)^5x12 + A x ( ( 1+0.1% )^5x12 -1 ) / 0.1%

A = { $57,000 - [ $10,000 x ( 1 + 0.001 )^60 ] } / [ ( ( 1 + 0.001 )^60 )-1 / 0.001 ]

A = ( $57,000 - $10,618.05 ) / 61.80471

A = $46,381.95 / 61.80471

A = $750.46