In 5 years Harry and Sally would like to have $26000 for a down payment 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?

Expert Solution

FV of Annuity = P*[{(1+i)^n}-1]/i

Where, FV = 26000, i = Interest Rate = 0.09/12 = 0.0075, n = Number of Periods = 5*12 = 60

Therefore,

26000= P*[{(1+0.0075)^60}-1]/0.0075

195= P*0.565681

Therefore, Amount to be deposited each month = P = 195/0.565681= $344.72

jeff jeffy answered 2 years ago

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