The deposit contributes approximately $152,217.45 to the financial goal, while the interest contributes approximately $57,782.55. The Periodic deposit is approximately $843.36
To determine the periodic deposit, we can use the formula for the future value of an ordinary annuity:
Future value = periodic deposit x [(1 + interest rate)^(number of periods) - 1] / interest rate
Using the given information:
Periodic deposit = ?
Interest rate = 5.5% compounded monthly
Time = 12 years (12 * 12 = 144 months
Financial goal = $210,000
Plugging these values into the formula, we get:
210,000 = Periodic deposit x [(1 + 0.055/12)^(144) - 1] / (0.055/12)
Simplifying and solving for the periodic deposit:
Periodic deposit ≈ $843.36 (rounded up to the nearest dollar)
To determine how much of the financial goal comes from deposits and how much comes from interest, we can subtract the sum of all the periodic deposits from the final financial goal.
The remaining amount represents the interest earned.
In this case, the deposit's contribution is approximately $152,217.45 and the interest's contribution is approximately $57,782.55.
The probable question may be:
a. Use the appropriate formula to determine the periodic deposit.
b. How much of the financial goal comes from deposits and how much comes from interest?
Periodic Deposit=$? at the end of each month
Rate=5.5% compounded monthly
Time=12 years
Financial Goal = $210,000
a. The periodic deposit is $
(Do not round until the final answer. Then round up to the nearest dollar as needed.)