Alexis want to buy a house in 5 years.She wants to save $75,000 over the next five years for a down payment.If she can earn an annual rate of 9% on her savings,how much must she deposit in equal payments at the end of each month for the next five years to reach her goal?
A)$1,250
B)$765.87
C)$994.38
D)$8,420.13

Question

Quizplus · Accepted Answer

To find the monthly deposit, we use the future value of an annuity formula: FV = Pmt * [(1 + r)^nt - 1] / r. Here, FV = $75,000, r = 0.09/12, n = 5 years, t = 12 months. Solving for Pmt gives approximately $994.38.

Alexis Want to Buy a House in 5 Years