How much would you need to deposit in an account each month in order to have $40,000 in the account in 6 years? Assume the account earns 8% interest.

Question

I cannot solve this. Can someone give me the steps? Thank you!

Answer 1

N=72 (6 years times 12 periods per year)

I= 8/12 (8% annual/12 months/year)

PV=0

PMT= Solve (solving for payment because its amount each period)

FV= 40,000

Can either use the formula using these values but easier to do the inputs in financial calculator or on excel.

Compute Payment you get $434.66. As a result you must deposit $434.66