Michael is planning to buy a house in six years and wants to have $45,000 for...

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Question

Michael is planning to buy a house in six years and wants to have $45,000 for a down payment. He can earn 4% on his savings a

Answer 1

Answer #1

Future value = Annuity * [(1 + r)ⁿ - 1] / r

45,000 = Annuity * [(1 + 0.04)⁶ - 1] / 0.04

45,000 = Annuity * [1.265319 - 1] / 0.04

45,000 = Annuity * 6.632975

Annuity = $6784

Michael will save $6784

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Answer 2

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