Question
In: Finance
You would like to buy a house and will need a down payment of $18,119 in...
You would like to buy a house and will need a down payment of $18,119 in 6 months.
How much would you have to invest, each month, starting next month, for 6 months to exactly pay for the down payment if your investments earn 3.7% APR compounded monthly?
Solutions
Expert Solution
Sol:
Future value (FV) = $18,119
Periods = 6 months
Interest rate = 3.7%, Compounded Monthly = 3.7 / 12 = 0.3083%
To determine how much would you have to invest each month we can use PMT function in excel:
|
FV |
18119 |
|
NPER |
6 |
|
Interest rate |
0.3083% |
|
Monthly payment |
$2,996.64 |
Therefore the amount that you would you have to invest each month will be $2996.64
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