Question

In: Finance

Nicholas Matveev wants to take a year-long cycling trip throughSouth America in three years.  He will...

  1. Nicholas Matveev wants to take a year-long cycling trip through South America in three years.  He will have to pay $5,000 costs at the start of the trip and then $1,000 per month for 12 months.  Assume the monthly payments are at the end of the month.  He has $1,000 saved now.  How much must he save each month until the trip if he earns 0.2% interest per month?

Solutions

Expert Solution

Enter the stroke in the financial calculator -
We have to calculate the Present value 1000 per month for 12 month
PMT = -1000
N = 12
I/Y = 0.2
CPT -PV = 11845.45
we have to need $ 5000 + 11845.45 after 3 years i.e 16845.45
we have to calculate how much he save each month untill the trip
Enter the Stroke in the financial calculator -
PV = -1000
FV = 16845.45
N = 36 ( 12*3 = 36 months)
I/Y = 0.2
CPT -PMT = -422.94
He have to save 422.94 per month


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