Question

monthly deposits are made into an account paying ​% nominal interest compounded monthly. If the objective of these deposits is to accumulate ​$ by the end of the ​year, what is the amount of each​ deposit?

Answer 1

$1433.28

Step-by-step explanation:

Calculation to determine the amount of each deposit

Using this formula

Future value of annuity=P*((1+r)^n-1)

Where,

Annual interest rate = 6%

Monthly interest rate (r) = 0.5%

Future value of annuity = $100,000

Number of years = 5

Number of deposits (n) = 60

Let plug in the formula

$100,000=P*((1+0.005)^60/0.005

=$100,000/69.77

=P$1433.28

Therefore the amount of each deposit is =$1433.28