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Kayne wants to save $14,000 in 6 years by making monthly payments into an ordinary annuity...

Kayne wants to save $14,000 in 6 years by making monthly payments into an ordinary annuity for a down payment on a condominium at the shore. If the annuity pays 0.7% monthly interest, what will his monthly payment be?

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Answer #1

Since interest is given in monthly, we have to convert 6 years to months. Therefore, number of periods = 6 * 12 = 72 months.

We can use "the future value of the annuity ordinary" formula to find the answer:

Where,
FVA = Future Value of Annuity
A = Annuity or monthly payment.
i = rate of interest in decimal form (0.7% = 0.007)
n = number of periods

Therefore,

Therefore, Kanye's monthly payment will be $150.21

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