Question

You plan to spend a semester abroad in France. You will live in France for 8 months starting 12 months from now. Each month in France will cost you $6,489 How much must you invest each month, for 4 months, starting next month to exactly pay for your trip if your investments earn 3.36% APR (compounded monthly)?

Answer 1

Rate =3.36%/12
Number of Months =8
Value of semester at the end of 12 months =PMT*((1-(1+r)^-n)/r) =6489*((1-(1+3.36%/12)^-8)/(3.36%/12)) =51263.9670

Value of Fees in month 4 =51263.9670/(1+3.36%/12)^8 =50129.9888

Investment each month =Value of Fees in month 4/((1+r)^n-1)/r) =50129.9888/((1+3.36%/12)^4-1)/(3.36%/12)) =12479.98