You currently have $4541 saved towards the purchase of a home theatre system. You want to be able to buy a system for $6225 plus GST in 4 years. Your money is earning 4.84% compounded monthly. What is the size of your monthly deposit?
A) $12.80
B) $28.80
C) $22.80
D) $13.55
E) $20.80

Question

Quizplus · Accepted Answer

To calculate the monthly deposit, we can use the future value of an annuity formula:FV = P * (((1 + r)^nt - 1) / r)where:FV is the future value of the annuityP is the monthly depositr is the monthly interest rate (4.84% / 12 = 0.00403)n is the number of months (4 years * 12 months/year = 48 months)t is the number of times per year that the interest is compounded (12)Substituting the given values into the formula, we get:6225 = P * (((1 + 0.00403)^48 - 1) / 0.00403)Solving for P, we get:P = $13.55Therefore, the size of the monthly deposit is $13.55.

You Currently Have $4541 Saved Towards the Purchase of a Home