Question

I need help

your brother would like to have 30,000 in 2 years for the purchase of a new car what monthly payment should he make into an account paying 5% per year compounded monthly to attain his goal?

a) $1,191.14
b) $1,161.14
c) $1,171.14
d) $1,231.14
e) $1,201.14

Answer 1

FV = future value ($30,000)

Pmt = monthly payment

r = annual interest rate (5%)

n = number of compounding periods per year (12 for monthly compounding)

t = time in years (2)

Plugging in the values, we get:

$30,000 = Pmt x [(1 + 0.05/12)^(12 x 2) - 1] / (0.05/12)

Simplifying the equation, we get: Pmt = $30,000 / [(1 + 0.05/12)^(12 x 2) - 1] / (0.05/12)

Pmt = $1,191.14 Therefore, the correct answer is (a) $1,191.14.