Question

How much monthly deposit must be made for 7 years and 3 months to accumulateP14,500 at 7% compounded monthly?

Answer 1

Given:

The time of the investment = 7 years and 3 months = 7 1/4 years

The interest rate = r = 7% = 0.07

compounded monthly, n = 12

We will find the monthly deposit (P) to accumulate $14,500

We will use the following formula:

`A=(P((1+(r)/(n))^(nt)-1))/((r)/(n))`

Substitute: A = 14500, t = 7.25, r = 0.07, n = 12

`\begin{gathered} 14500=P*(((1+(0.07)/(12))^(12*7.25)-1))/((0.07)/(12)) \\ \\ 14500=P*112.9175 \\ \\ P=(14500)/(112.9175)=128.4122874 \end{gathered}`

Rounding to the nearest tenth

So, the answer will be The monthly deposit = 128.41