Sandy knows that she needs $82,000 for a 15% down payment on a house she can afford. She found an investment that earns 3.25% interest compounding monthly. How much should she put in the account now, rounded to the nearest dollar, to ensure she has the down payment amount in 5 years?

Question

anonymous · Answer

$12,034

 $38,915

 $69,717

 $72,374
I REALLY NEED THIS

whpalmer4 · Answer

$$FV = PV(1+\frac{r}{N})^{Nt}$$where $N$ is number of compounding intervals per year, $t$ is number of years, $r$ is nominal annual interest rate, expressed as a decimal, PV is present value, FV is future value.

You know FV, r, N, t, so just rearrange that equation to give you PV in terms of the others and plug in the numbers...

anonymous · Answer

thanks

whpalmer4 · Answer

also, be sure you don't plug in the wrong interest rate!

anonymous · Answer

got it :)

anonymous · Answer

Max has just won some money on a game show! He has the option to take a lump sum payment of $500,000 now or get paid an annuity of $4,900 per month for the next 10 years. Assuming the growth rate of the economy is 2.9% compounding annually over the next 10 years, which is the better deal for Max and by how much?

anonymous · Answer

what would i do for this one