Question

You want to invest part of your monthly paycheck to finance a vehicle. You wish to have enough in the account to withdraw $1000 a month every month for 8 years, beginning 20 years from now. at the end of the 20 year period, you wish to stop investing into the account. The account pays 0.5 interest per month.

a.) how much money will you need 20 years from now to achieve this?

b.) how much must you deposit each month during the next 20 years?

plagiarized answers will be reported. Thanks for any help

Answer 1

a.) how much money will you need 20 years from now to achieve this?

PV_20 of the withdrawals

n = 8 * 12 = 96 withdrawals

r = 0.005

We need $76,095.21826 in 20 years from now to achieve financing a vehicle.

b) n = 20 * 12 = 240

We need to deposit $164.6936863319 monthly for the next 20 years