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?

Solutions

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

Next > < Previous

Related Solutions

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?

In 6 years Harry and Sally would like to have $28,000.00 for a down payment on...

In 6 years Harry and Sally would like to have $28,000.00 for a down payment on a house. How much should they deposit each month into an account paying 5% compounded monthly?

You would like to save $50,000 for a down payment on a home in five years....

You would like to save $50,000 for a down payment on a home in five years. How much do you need to have saved today if your investments are expected to earn a return of 5% per year? $43,133 $37,500 $38,960 $50,000 $39,176

You would like to buy a house and will need a down payment of $19,367 in...

You would like to buy a house and will need a down payment of $19,367 in 8 months. How much would you have to invest, each month, starting next month, for 8 months to exactly pay for the down payment if your investments earn 2.58% APR compounded monthly?

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?

Kari would like to save $10,000 for a down payment on a house. Illustrate the difference...

Kari would like to save $10,000 for a down payment on a house. Illustrate the difference in years it will take her to double her current $5,000 savings, $5000 invested today at 6% would be worth $10000 in ? years. $5000 invested today at 12% would be worth $10000 in ? years. $5000 invested today at 18% would be worth $10000 in ? years

You would like to accumulate $12,000 for a down payment on a house by depositing $400...

You would like to accumulate $12,000 for a down payment on a house by depositing $400 on the first of every month in a savings account that pays 12% annual interest, compounded monthly. How long will it take you to reach your goal?

You would like to purchase a townhouse and you wish to save forthe down payment....

You would like to purchase a townhouse and you wish to save for the down payment. What amount invested at the end of each year at 10% annually will grow to $10,000 at the end of five years

Ann would like to buy a house. It costs $2,500,000. Her down payment will be $50,000....

Ann would like to buy a house. It costs $2,500,000. Her down payment will be $50,000. She will take out a mortgage for the remainder. It will be a 30 year, fully amortizing, FRM, with constant monthly payments and monthly compounding. The annual interest rate is 4.50%. She will pay $5,000 in closing costs at origination. She will also pay 1.75% of the balance in buy-down points at origination. Note: the home is bought and the loan is taken in...

5.You decide that you need $88,000 in 10 years in order to make a down payment...

5.You decide that you need $88,000 in 10 years in order to make a down payment on a house. You plan to make annual deposits to achieve your goal. If interest rate is 8%, how much should be deposited each time? Hint use the Financial Function “PMT” to solve for the payment and PV will be zero. 6. You owe $46,000 to your parents for funding some of your college. You promise to make 8 annual payments of $8,000 to...

Subjects