Question

You need to fund a tuition payment of $44,678 in 17 months. You plan to make...

You need to fund a tuition payment of $44,678 in 17 months. You plan to make 7 equal

monthly payments starting next month to your savings account to go toward your tuition. If

your savings account pays 3.9% APR compounded monthly, how big must the payments be?

(a/(1+c/1200)^f)

Homework Answers

Answer #1
Monthly rate= 3.9%/12 0.3250%
Step 1 :Computation of PV on 7th month
Present value= 44,678/(1+0.3250%)^10
Present value= $   43,251.59
step 2 : computation of monthly payment
put in calculator
FV $   43,251.59
PV 0
I 0.3250%
N 7
Compute PMT ($6,118.82)
answer = $6,118.82
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