Howard is saving for a long holiday. He deposits a fixed amount every month in a bank account with an EAR of 11.8%. If this account pays interest every month then how much should he save from each monthly paycheck in order to have $ 15 comma 000 in the account in five years' time?

Howard is saving for a long holiday. He deposits a fixed amount every month in a bank account with an EAR of 11.8%. If this account pays interest every month then how much should he save from each monthly paycheck in order to have $ 15,000 in the account in five years' time?

We need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

Isolating A:

A= (FV*i)/{[(1+i)^n]-1}

n= 5*12= 60

i= 0.118/12= 0.00983

FV= 15,000

A=(15,000*0.00983)/[(1.00983^60)-1]= $184.67

Howard is saving for a long holiday. He deposits a fixed amount every month in a bank account with an EAR of 11.8​%. If this account pays interest every month then how much should he save from each monthly paycheck in order to have $ 15 comma 000 in the account in five ​years' time?

Answer :

Other Questions

Howard is saving for a long holiday. He deposits a fixed amount every month in a bank account with an EAR of 11.8%. If this account pays interest every month then how much should he save from each monthly paycheck in order to have $ 15 comma 000 in the account in five years' time?