Question

25 POINTS!!!!

Gabe is getting married in three years and wants to save $20,000 for his wedding. He opens an account earning 6% interest, compounded monthly. Find the periodic monthly deposit (payment) needed to achieve a balance of $20,000 after three years.

Answer 1

508

Explanation:

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Answer 2

Answer: $509

Explanation:

Given : Gabe is getting married in three years and wants to save $20,000 for his wedding. He opens an account earning 6% interest, compounded monthly.

According to the given description, we have

A= $20,000 , r= 6%=0.06 , t= 3 years , n= 12 [1 yearn = 12 months]

Formula to find Periodic monthly deposit :-

`P=(A\left((r)/(n)\right))/(\left(1+(r)/(n)\right)^(\left(n\cdot t\right))-1)`

Substitute given values in the above formula , we get

`P=(20000\left((0.06)/(12)\right))/(\left(1+(0.06)/(12)\right)^(\left(3\cdot12\right))-1)\\\\=(100)/(1.19668052482-1)\\\\=(100)/(0.19668052482)=508.438749031\approx509`

Hence, the periodic monthly deposit (payment) needed to achieve a balance of $20,000 after three years= $509.