Question

Tomas plans to make monthly deposits into an account with a 4% annual interest rate. he wants to have a minimum balance of $200,000 after 30 years. which represents the least amount that tomas could contribute each month approximately?

1)$280
2) $290
3) $560
4) $580

Answer 1

To find the least amount Tomas could contribute each month, use the future value of an annuity formula to calculate the monthly deposit required. The approximate answer is 4) $580.

Step-by-step explanation:

To calculate the least amount that Tomas could contribute each month, we need to use the future value of an annuity formula. The formula is:

FV = P * ((1 + r)^n - 1) / r

• FV is the future value ($200,000)
• P is the monthly deposit we're trying to find
• r is the monthly interest rate (4% / 12)
• n is the number of periods (30 years * 12)

Plugging in the values, we have:

$200,000 = P * ((1 + 0.04/12)^(30*12) - 1) / (0.04/12)

Simplifying, we find that P is approximately $580. Therefore, $580 represents the least amount that Tomas could contribute each month.