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How much monthly deposit must be made for 7 years and 3 months to accumulateP14,500 at 7% compounded monthly?

Sagot :

Given:

The time of the investment = 7 years and 3 months = 7 1/4 years

The interest rate = r = 7% = 0.07

compounded monthly, n = 12

We will find the monthly deposit (P) to accumulate $14,500

We will use the following formula:

[tex]A=\frac{P((1+\frac{r}{n})^{nt}-1)}{\frac{r}{n}}[/tex]

Substitute: A = 14500, t = 7.25, r = 0.07, n = 12

[tex]\begin{gathered} 14500=P*\frac{((1+\frac{0.07}{12})^{12*7.25}-1)}{\frac{0.07}{12}} \\ \\ 14500=P*112.9175 \\ \\ P=\frac{14500}{112.9175}=128.4122874 \end{gathered}[/tex]

Rounding to the nearest tenth

So, the answer will be The monthly deposit = 128.41

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