Varian wants to have $500,000 in an investment account six years from now.The account will pay .58 percent interest per month.If he saves money every month, starting one month from now, how much will he have to save each month to reach his goal?

Question

Quizplus · Accepted Answer

The correct answer is A.The formula for calculating the future value of an annuity is:FV = P * (((1 + r)^n - 1) / r)where:FV is the future valueP is the monthly paymentr is the monthly interest raten is the number of monthsIn this case, we have:FV = $500,000r = .58% / 12 = .004833n = 6 * 12 = 72Plugging these values into the formula, we get:$500,000 = P * (((1 + .004833)^72 - 1) / .004833)$500,000 = P * 72.04905P = $500,000 / 72.04905P = $5,614.90Therefore, Varian will have to save $5,614.90 each month to reach his goal.

Varian Wants to Have $500,000 in an Investment Account Six