Question

Ivan is going to invest to help with a down payment on a home. How much would he have to invest to have $46,900 after 10 years, assuming an interest rate of 1.62% compounded quarterly?

Do not round any intermediate computations, and round your final answer to the nearest dollar.

Answer 1

$25705.38

Explanation:

$46,900/ ?= 46,900/1*1.62^4 *10 = 46,900/68.8747536 *100 = 68094.6175 = $68094.62 we can deduct to see how much he saves instead say compared to approx monthly rental $800 -$1000 = $68094.62 -$46,900 =$21,194.62 over 10 years because investment is cheaper than rental as $21,194.62 /10 =$2119.462 yearly =2119.462/12 monthly =£176.621833 and even if rental if say was as low as $600 it is still more than 200% cheaper to invest. however this question suggests compound of savings before purchase. It is same indifference of interest so we deduct again....$46,900 -$21,194.62 =$25705.38= 68094.6175-46,900 =21194.6175 and 46,900-21194.6175 =25705.3825