John is planning to buy a house in three years. He thinks he needs to put...
John is planning to buy a house in three years. He thinks he needs to put down $55,000 in three years as a down payment. Currently John has $15,000. He would like to start saving in a bank that offers 8% annual interest rate.
How much should John save every month into that bank account so that he can accomplish his goal?
Homework Answers
rate positively ..
| Computation of present value | ||
| we have to use financial calculator to solve this | ||
| put in calculator - | ||
| FV | 55000 | |
| PV | -15000 | |
| I | 8%/12 | 0.667% |
| N | 3*12 | 36 |
| Compute PMT | ($887) | |
| therefore answer = | $886.79 | |
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