Determine the periodic deposit and how much of the financial goal comes from deposits and how much comes from interests

Question

periodic deposit: $? At the end of every 3 months

4.5% compound quarterly

Time: 6 years

Financial goal: $15,000

Answer 1

To best answer this type of question use an HP 12C financial calculator.

Since you are making payments at the end of the period press g end.

Follow th sign convention + for payments and " - " for receipts. Here are the steps:

1) Enter 15,000 then the minus sign and then FV for future value 2) Next enter 24 and then N for the number of periods. 3) Finally enter the quarterly interest rate of 4.5% / 4 = 1.125 then press I

Finally press PMT for payment and get 547.9052 which is the quarterly payment you must make to achieve your $15,000 goal

To get the interest earned during the 6 years enter 24 then g AMORT and you will get

$1,850.27 To get the amount of principal paid in during the period multiply the payment amount by 24 to $13,149.72.