Suppose an investor plans to make monthly deposits into an account that pays 9% interest, compounded...

Suppose an investor plans to make monthly deposits into an account that pays 9% interest, compounded monthly, so that $100,000 will be in the account immediately after the payment at the end of Year 10. The first payment will occur at the end of Month 1 (one month from the present). How much must be deposited monthly?

A.
$517 per month

B.
$9,670 per month

C.
$6,580 per month

D.
$9,67 per month

Solutions

Expert Solution

The monthly deposits would be:-

A = F*(A/F,I,N)

I = 9/12 = 0.75

N = 10*12 = 120

= 100000*(A/F,0.75,120)

= 100000*0.005168

= 517 Per month

option(A)

Rahul Sunny answered 1 year ago

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