At the end of 8 years,your friend wants to have $50,000 saved for a down payment on a house.He expects to earn 8%-compounded monthly-on his investments over the next 8 years.How much would your friend have to put in his investment account each month to reach his goal?

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Quizplus · Accepted Answer

To solve this, we use the formula for the future value of a series: $FV = P \times \frac{(1 + r)^n - 1}{r}$, where FV is the future value, P is the monthly payment, r is the monthly interest rate, and n is the total number of payments. Here, FV = $50,000, r = 0.08/12 (since it's compounded monthly), and n = 8*12 (8 years, 12 months each). Rearranging the formula to solve for P gives us the monthly payment needed to reach the goal. Plugging in the values, we find that the monthly payment is approximately $374.

At the End of 8 Years,your Friend Wants to Have