Question

You need $31,000 for a down payment on a house. You plan to make monthly payments of $266 into an account earning an APR of 6.3%. The deposits will be made at the end of each month. How many years will it take for you to save up the amount needed for the down payment? (What numbers do I put in for N, I/Y, PV, PMT, and FV into the financial calculator?)

Answer 1

Amount required for down payment - S31,000 Monthly payment $266 Interest rate -6.3 % * 1 /12 0.525 % Per month Term n Amount required for down payment-Future vaue of monthly payments S31,000 Monthly payments1+I 1/I $31,000 = $266 * [( 1 +0.525%) n- 1 ] / 0.525% $31,000 * 0.52590 / S266 = [( 1 + 0.525% )'m-1 ] 0.611842 105 [(1.00525) n- 1] (1.00525 ) n 0.611842 105 1 (1.00525 1.611842105 (1.00525 -1.61 (Rounded) To compute required term, go for trail and error approach.... If required term, n91 Months L.H.S (1.00525)"91 1.610428477 1.61 (Rounded)= R.H.S Therefore required term, n - 91 Months /12 Months 7.58333333 Years Ans: Term,n 7.6 Years (Rounded)