Question

A couple plans to save $530 per month for the next 6 years for a down...

A couple plans to save $530 per month for the next 6 years for a down payment on a house. If the couple can earn an APR of 8.3% in their savings/investments. How much money will they have for the down payment?

A. $49,291

B. $47,011

C. $49,774

D. $66,682

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Homework Answers

Answer #1

A. $49,291

Future Value of saving = Monthly Saving * Future Value of annuity of 1
= 530 *               93
= 49,290
Working:
Future Value of annuity of 1 = (((1+i)^n)-1)/i Where,
= (((1+0.006917)^72)-1)/0.006917 i = 8.3%/12 = 0.006917
=               93 n = 6*12 = 72

The difference of $1 may be due to rounding off diference.

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