log(155000/1500)(0.0799/12) +1/log (1+ 0.0799/12) = 12t

Question

You and your new spouse each bring home $1500 each month after taxes and other payroll deductions. By living frugally, you intend to live on just one paycheck and save the other in a mutual fund yielding 7.99% compounded monthly. How long will it take to have enough for a 20% down payment on a $155,000 condo in the city?

 

Answer 1

The formula listed is almost correct, but it should be

log[(155000/1500)(0.0799/12) +1]/log (1+ 0.0799/12) = 12t

log(1.688027778)/log(1.006658333) = 12t

 

You should have 12t = 79 months or t = 6.6 years