Question

Serafina is making monthly payments into an annuity. She wants to have $900 in the fund in six months, and the account pays 8.4% annual interest. What are her monthly payments?

Can anyone help with this please? I am really stuck on this one

Answer 1

if your dealing with monthly payments and collecting interest monthly, you must first convert the annual interest rate into that of a monthly interest rate

Answer 2

Do you divide to do that?

Answer 3

yeah!

Answer 4

Would it be 1.4?

Answer 5

you divide the yearly rate by how many months are in a year

Answer 6

.7

Answer 7

yup
so now you know some things:
1. Future amount (FVA) = $900
2. Monthly interest rate (i) = 0.007
3. Number of periods (n) = 6
4. Payment per Period = ???

http://owll.massey.ac.nz/images/ms_applied_maths_25.gif

Answer 8

in order to solve the amount per payment you can rearrange that fromula in the picture

Answer 9

ok ill give it a try ty