Christopher would like to have $20,000 for a house down payment seven years from now.How much money would he need to save every quarter in an investment that pays 9% APR compounded quarterly?

Question

Quizplus · Accepted Answer

To find the quarterly savings needed, we use the future value of an ordinary annuity formula: FV = Pmt * [(1 + r)^nt - 1] / r. Here, FV = $20,000, r = 0.09/4 = 0.0225, n = 4 quarters/year * 7 years = 28. Solving for Pmt gives approximately $520.51.

Christopher Would Like to Have $20,000 for a House Down