Cam saved $280 each month for the last four years while he was
working. Since he has now gone back to school, his income is lower
and he cannot continue to save this amount during the time he is
studying. He plans to continue with his studies for three years and
not withdraw any money from his savings account. Money is worth
3.9% compounded monthly.
(a) How much will Cam have in total in his savings account when he finishes his studies?
(b) How much did he contribute?
(c) How much will be interest?
| Ans a) | value in account today | |||
| Put in calculator | ||||
| PV | 0 | |||
| PMT | -280 | |||
| I | 3.9%/12 | 0.3250% | ||
| N | 4*12 | 48 | ||
| compute FV | $14,519.56 | |||
| Now value at the end of finishing studies | ||||
| PV | ($14,519.56) | |||
| PMT | 0 | |||
| I | 3.9%/12 | 0.3250% | ||
| N | 3*12 | 36 | ||
| compute FV | $16,318.62 | |||
| Answer = | $16,318.62 | |||
| Ans b) | Contribution = | 13440 | ||
| 280*48 | ||||
| Ans c) | Interest amount = | $2,878.62 | ||
| 16318.62-13440 | ||||
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