Question

Alexis want to buy a house in 5 years. She wants to save $75,000 over the next five years for a down payment. If she can earn an annual rate of 9% on her savings, how much must she deposit in equal payments at the end of each month for the next five years to reach her goal

Answer 1

the monthly payment is $994.38

Step-by-step explanation:

For computing the deposit amount made in equal payment for the next five years we need to apply the PMT formula i.e. to be shown in the attachment below:

Given that,

Present value = $0

Future value or Face value = $75,000

RATE = 9% ÷ 12 = 0.75%

NPER = 5 years × 12 = 60 years

The formula is shown below:

= PMT(RATE;NPER;PV;-FV;type)

The future value come in negative

So, after applying the above formula, the monthly payment is $994.38