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You're prepared to make monthly payments of $340, beginning at the end of this month, into...

You're prepared to make monthly payments of $340, beginning at the end of this month, into an account that pays 6 percent interest compounded monthly. How many payments will you have made when your account balance reaches $20,575?

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Expert Solution

Information provided:

Future value= $20,575

Monthly payment= $340

Interest arte= 6%/12= 0.50%

The question pertains to annuity due. Annuity due refers to the annuity payments made at the beginning of the period.

The financial calculator is set in the end mode. Annuity due is calculated by setting the calculator to the beginning mode (BGN). To do this, press 2nd BGN 2nd SET on the Texas BA II Plus calculator.

The number of payments required to be made for the account to reach $20,575

Is calculated with the help of a financial calculator.

The below has to be entered in a financial calculator in BGN mode:

FV= 20,575

PMT= 340

I/Y= 0.50

Press the CPT key and N to calculate the number of payments required to be made for the account to reach $20,575.

The value obtained is 71.8194.

The number of monthly payments required to be made for the account to reach $20,575 is 71.8194 or 71.82.

In case of any further queries, kindly comment on the solution.

jeff jeffy answered 1 year ago
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