HOW MUCH PER MONTH SHOULD HE DEPOSIT INTO THE ACCOUNT TO HAVE 800,000 in 10 year
ID: 1117889 • Letter: H
Question
HOW MUCH PER MONTH SHOULD HE DEPOSIT INTO THE ACCOUNT TO HAVE 800,000 in 10 years. Ive posted this before and the answer was above $500,000 per month. Thats too high. Please help!
(8 pts) Craig is saving money to buy a house in Daly City. He needs $800,000 to buy a house in O years. He decides to make a deposit at the end of every month into an account that pays 3.7% compounded monthly. How much does he need to deposit into this account every month in order to have $800,000 after 10 years? Round answer to two decimal places 1.Explanation / Answer
Monthly interest rate = 3.7% / 12 = 0.3083%
Number of months = 10 x 12 = 120
If required monthly deposit be D, then
D x FVIFA(0.3083%, 120) = $800,000
D x 144.9410** = $800,000
D = $800,000 / 144.9410 = $551.95
**FVIFA(r%, N) = [(1 + r)N - 1] / r
FVIFA(0.3083%, 120) = [(1.003083)120 - 1] / 0.003083 = (1.4469 - 1) / 0.00383 = 0.4469 / 0.003083 = 144.9410
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