Determine the monthly payment necessary to accumulate $30,000 in a fund paying 6% per year, compounded monthly, for 8 years. Assume end-of-period deposits and compounding at the same intervals as deposits. Round the answer to the nearest cent.
A)$267.77 per month
B) $186.89 per month
C) $244.24 per month
D) $206.76 per month
E) $201.58 per month

Question

Determine the monthly payment necessary to accumulate $30,000 in a fund paying 6% per year, compounded monthly, for 8 years. Assume end-of-period deposits and compounding at the same intervals as deposits. Round the answer to the nearest cent. ​
A)$267.77 per month
B) $186.89 per month
C) $244.24 per month
D) $206.76 per month
E) $201.58 per month

Quizplus · Accepted Answer

To find the monthly payment, use the future value of an annuity formula: FV = Pmt * [(1 + r)^nt - 1] / r. Here, FV = $30,000, r = 0.06/12, n = 8*12. Solving for Pmt gives approximately $244.24.

Determine the Monthly Payment Necessary to Accumulate $30,000 in a Fund