Varian wants to have $500,000 in an investment account six years from now. The account will pay. 58 percent interest per month. If he saves money every month, starting one month from now, how much will he have to save each month to reach his goal? Multiple Choicea. $5,391.05b. $5,360.94c. $5,053.86d. $5,614.90e. $6,049.86

Question

Bryson Thomas

Business

18 July, 03:03

Varian wants to have $500,000 in an investment account six years from now. The account will pay. 58 percent interest per month. If he saves money every month, starting one month from now, how much will he have to save each month to reach his goal? Multiple Choicea. $5,391.05b. $5,360.94c. $5,053.86d. $5,614.90e. $6,049.86

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Answers (1)

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Sage Odonnell · Answer 1

d. $5,614.90

Explanation:

The amount that the Varian will save at the end of the every month in order to have $500,000 at the end of the sixth year shall be determined through the future value of annuity formula which shall be calculated as follows:

Future value of annuity=R[ ((1+i) ^n-1) / i]

In the given question

Future value of annuity=$500,000

R=amount that the Varian will be saved per month=?

i = interest rate per month=0.58%

n = payments involved=6*12=72

$500,000=R[ ((1+0.58%) ^72-1) / 0.58%]

R=$5,614.90

So based on the above calculation, the answer shall be d. $5,614.90