Question

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)

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