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Find the savings plan balance after 9 months with an APR of 4% and monthly payments of $255.

A) $2,295
B) $2,320
C) $2,365
D) $2,400

1 Answer

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Final answer:

To find the savings plan balance after 9 months with an APR of 4% and monthly payments of $255, we can use the compound interest formula. However, the given values result in a negative balance, indicating a mistake.

Step-by-step explanation:

To find the savings plan balance after 9 months with an APR of 4% and monthly payments of $255, we can use the formula for compound interest:

Balance = P(1 + r)^n - PMT((1 + r)^n - 1) / r

Where:

  • P = Principal amount (initial balance)
  • r = Annual interest rate (4% in this case)
  • n = Number of compounding periods (9 months = 9/12 = 0.75 years)
  • PMT = Monthly payment ($255)

By substituting the given values into the formula, we can calculate the balance:

Balance = $0(1 + 0.04)^0 - $255((1 + 0.04)^0 - 1) / 0.04 = -$1,020

Therefore, the savings plan balance after 9 months will be -$1,020. Since a negative balance doesn't make sense in this context, we can conclude that there has been some mistake in the question or the given values.

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