You decide to start saving up to buy your first home. You find an account that pays 8% interest compounded monthly. If you plan on purchasing your home in ten years, how much must you put into the account to have $50,000 for a down payment?

Question

Ethen Bartlett

Mathematics

22 May, 07:24

You decide to start saving up to buy your first home. You find an account that pays 8% interest compounded monthly. If you plan on purchasing your home in ten years, how much must you put into the account to have $50,000 for a down payment?

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Answers (1)

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Payten Orr · Answer 1

The formula is

A=p (1+r/k) ^kt

A down payment 50000

P the amount you must put?

R interest rate 0.08

K compounded monthly 12

T time 10 years

Solve the formula for p

P=A: (1+r/k) ^kt

P=50,000: (1+0.08:12) ^ (12*10)

p=22,526.17