Use of Financial Calculator TI BA II Plus required. You want to save $10 000 toward the down payment on a house in five years. If you can earn 8 percent (compounded monthly), approximately how much should you save each month to reach this short-term goal?

Question

Quizplus · Accepted Answer

Using the financial calculator, we can solve for the monthly savings required as follows:
N = 5 * 12 = 60 (number of months)
I/Y = 8/12 = 0.6667% (monthly interest rate)
FV = $10,000 (future value or goal)
PMT = ??? (monthly savings required)
Solving for PMT, we get PMT = -$135.99, which means you need to save approximately $136 per month to reach your short-term goal of saving $10,000 for a down payment on a house. Therefore, the best choice is B.

Use of Financial Calculator TI BA II Plus Required