Question

Ben wants to buy a $22000 car in 4 years. How much money must he deposit monthly in an account paying 2.9% compounded monthly so that he will save enough to pay for his car?

His monthly deposits should be of $

Answer 1

Here rate = 2.9%, nper = 4 years*12 months per year = 48 months and FV = $22,000

The amount of monthly deposit can be computed using the "PMT" function.

Thus PMT(2.9%, 48, 0, -22000) = $216.71

(Please note that 0 represents the present value and FV is the price of the car in 4 years which is $22000)

Thus the amount of monthly deposit = $216.71

Answer = $216.71

Month	Monthly deposit	1+r	FVIF	FV
1	216.71	1.029	3.8329	830.62
2	216.71		3.7248	807.21
3	216.71		3.6199	784.46
4	216.71		3.5178	762.36
5	216.71		3.4187	740.87
6	216.71		3.3224	719.99
7	216.71		3.2287	699.70
8	216.71		3.1377	679.98
9	216.71		3.0493	660.82
10	216.71		2.9634	642.19
11	216.71		2.8798	624.09
12	216.71		2.7987	606.51
13	216.71		2.7198	589.41
14	216.71		2.6432	572.80
15	216.71		2.5687	556.66
16	216.71		2.4963	540.97
17	216.71		2.4259	525.72
18	216.71		2.3576	510.91
19	216.71		2.2911	496.51
20	216.71		2.2265	482.52
21	216.71		2.1638	468.92
22	216.71		2.1028	455.70
23	216.71		2.0435	442.86
24	216.71		1.9860	430.38
25	216.71		1.9300	418.25
26	216.71		1.8756	406.46
27	216.71		1.8227	395.01
28	216.71		1.7714	383.87
29	216.71		1.7214	373.06
30	216.71		1.6729	362.54
31	216.71		1.6258	352.32
32	216.71		1.5800	342.40
33	216.71		1.5354	332.75
34	216.71		1.4922	323.37
35	216.71		1.4501	314.25
36	216.71		1.4092	305.40
37	216.71		1.3695	296.79
38	216.71		1.3309	288.43
39	216.71		1.2934	280.30
40	216.71		1.2570	272.40
41	216.71		1.2215	264.72
42	216.71		1.1871	257.26
43	216.71		1.1537	250.01
44	216.71		1.1211	242.96
45	216.71		1.0895	236.12
46	216.71		1.0588	229.46
47	216.71		1.0290	223.00
48	216.71		1.0000	216.71
			Total	22,000.00