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In5 years Harry and Sally would like to have $26000 for a downpayment on...

In 5 years Harry and Sally would like to have $26000 for a down payment on a house. How much should they deposit each month into an account paying 9% compounded monthly?

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Expert Solution

Deposit each month so that at the end year 26000 for down payment

Thus,

Future Value = Deposit Amount * FVAF(r, n)

26,000 = Deposit Amount * FVAF[ 9%/12, 5*12 - 1] + Last month deposit

26,000 = Deposit Amount * FVAF[ 0.75%, 59 ]

26,000 = Deposit Amount * [ 1.007559 + 1.007558 + ...... + 1.0075] + Deposit Amount

26,000 = Deposit Amount * [ 73.8701 + 1 ]

26,000 = Deposit Amount * 74.8701

Deposit Amount = 26000 / 74.8701

Deposit Amount = $ 347.27 per month

jeff jeffy answered 2 years ago
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