You are saving money to buy a laptop computer, one with \"lots of horsepower\" s

Question

You are saving money to buy a laptop computer, one with "lots of horsepower" so that you can run 3D CAD software. (At least that what you tell people - you really want a smokin' gaming computer.) One year from now, you will need $2,100 for the purchase.

How much should you save each month for 12 months, starting at the end of next month, to reach your goal if the effective monthly interest rate is 2.7%?

Answer tolerance +/- $0.05. Do not include units in your answer. Express your answer to the nearest $0.01.

Explanation / Answer

FV = $2100

Let the savings each month = y

y x (1 + 2.7%)11 + y x (1 + 2.7%)10 + ... + y x (1 + 2.7%)0 = 2100

solve for 'y':

y = $150.51

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