Kurt wants to have $25,000 in an investment account four years from now. the account will pay 0.2 percent interest per month. if he saves money every month, starting one month from now, how much will he have to save each month to reach his goal

Question

Mathematics

Danika Roy

9 December, 23:55

Kurt wants to have $25,000 in an investment account four years from now. the account will pay 0.2 percent interest per month. if he saves money every month, starting one month from now, how much will he have to save each month to reach his goal

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Answers (1)

Know the Answer?

Kaylin Howell · Answer 1

Given:

F = 25000, future value

i=0.02 per month, compounded monthly

n=4*12=48 periods (months)

Need A=monthly deposit

The amount A is given by the formula

A=Fi / ((1+i) ^n-1) [can be derived from the annuity formula]

=25000*0.02 / ((1.02^48-1)

= 315.05

Answer: Kurt will need to save $315.05 each month to reach the goal of saving $25000 after 4 years.