A homeowner is planning to have a concrete driveway poured in 3 years. She receives a quote of $6500 from a local company. The homeowner has a savings account that pays 3% annual interest, compounded monthly.
a) How much money per month does she need to deposit in her account in order to be able to pay in cash for the driveaway n 3 years.
B) how much of the money she uses to pay for the driveway will come
i) money deposited into the account
ii) interest?
a) How much money per month does she need to deposit in her account in order to be able to pay in cash for the driveaway n 3 years.
B) how much of the money she uses to pay for the driveway will come
i) money deposited into the account
ii) interest?
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This is a problem concerning monthly annuity.
A = Fr/{[(1+r)^n - 1]*(1+r)}
Here, F = 6500, r = 0.03/12 = 0.0025 and n = 36
The installment is
A = Fr/{[(1+r)^n - 1]*(1+r)} = A = 6500*0.0025/{[(1.0025)^36 - 1]*1.0025}
= $172.35
Total payment = 172.35*36 = 6204.60
Interest = 6500 - 6204.60 = $295.40
Hope this helps.
A = Fr/{[(1+r)^n - 1]*(1+r)}
Here, F = 6500, r = 0.03/12 = 0.0025 and n = 36
The installment is
A = Fr/{[(1+r)^n - 1]*(1+r)} = A = 6500*0.0025/{[(1.0025)^36 - 1]*1.0025}
= $172.35
Total payment = 172.35*36 = 6204.60
Interest = 6500 - 6204.60 = $295.40
Hope this helps.
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Caramba
Hombre
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