Sandeep wants to retire in 15 years and he needs to have $60,000 for a down payment on his retirement home.

Sandeep wants to retire in 15 years and he needs to have $60,000 for a down payment on his retirement home. If he makes quarterly payments into an account paying 7% annual interest compounded quarterly, how much should he deposit each quarter to obtain the desired down payment?

Expert Solution

Future Value needed by Sandeep = $60,000.

in time period t = 15 years

at interest rate(r) = 7% compounded quarterly.

I = 7%/4 = 0.0175

number of periodic payments (n) = 15 years * 4 (per year) = 60.

() FV = PLAY . [{1+r) - 1 r

FV = Future Value

P = Periodic Payment amount

$60,000 = P[104.675216]

P = $573.201587

He should deposit P = $573.20 (rounded to two decimals) every quarter.

sunshi answered 3 years ago

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