You want to buy a new car in 8 years and expect the car to cost 97,000. Your bank offers a plan with a guaranteed APR of 4.5%. If you make regular monthly deposits each month. How much should you deposit each month to end up with 97,000 in 8 years?
What formula do I use?

Question

You want to buy a new car in 8 years and expect the car to cost 97,000. Your bank offers a plan with a guaranteed APR of 4.5%. If you make regular monthly deposits each month. How much should you deposit each month to end up with 97,000 in 8 years?
What formula do I use?

anonymous · Answer

Do I use A= p(1+APR/n)^(ny)

wolf1728 · Answer

Total = Principal * (1 + Rate) ^ Years

wolf1728 · Answer

I'm guessing n means number of months.

wolf1728 · Answer

Hmmm, I'm beginning to think this is more of an annuity type investment instead of a compound interest problem.

anonymous · Answer

i think i use the PMT formula

wolf1728 · Answer

I think I finally have it:

wolf1728 · Answer

No that is the formula to use:
the amount is the amount deposited every month
Hmmm, I guess I'll have to solve that for amount.

anonymous · Answer

I got 841.30 tell me if u got that

wolf1728 · Answer

As of the moment I'm trying to solve that formula foramount

anonymous · Answer

kk let me know when u have an answer

anonymous · Answer

Did u solve it

amistre64 · Answer

i dont use formulas, i use concepts to develop my own formulas ....

amistre64 · Answer

You want to buy a new car in 8 years 
         and expect the car to cost 97,000. 

Your bank offers a plan with a guaranteed APR of 4.5%.

 If you make regular monthly deposits. 
        How much should you deposit each month to end up 
          with 97,000 in 8 years

8*12 payments = 96 total deposits

spose we had to take out the loan now and pay it back in 8 years?

$$B_o = B_o$$
$$B_1 = B_ok-P$$
$$B_2 = B_ok^2-Pk-P$$
$$B_3 = B_ok^3-Pk^2-Pk-P$$
...$$B_n=B_ok^n-P\frac{1-k^n}{1-k}$$
solving for P, when B_n = 0
$$B_ok^n=P\frac{1-k^n}{1-k}$$
$$B_ok^n\frac{1-k}{1-k^n}=P$$

amistre64 · Answer

P = 97000k^(96)(1-k)/(1-k^(96)), k=1+.045/12

you need to make deposits of abt 1205.05  each month to save up that amount of cash in 8 years

amistre64 · Answer

http://www.wolframalpha.com/input/?i=97000k%5E%2896%29%281-k%29%2F%281-k%5E%2896%29%29%2C+k%3D1%2B.045%2F12

amistre64 · Answer

or,  if i try this another way to verify my idea ...

amistre64 · Answer

$$B_0 = P$$
$$B_1 = Pk+P$$
$$B_2 = Pk^2+Pk+P$$
$$B_3 = Pk^3+Pk^2+Pk+P$$
...$$B_n = Pk+P\frac{1-k^n}{1-k}$$

amistre64 · Answer

$$97000=Pk^{96}+P\frac{1-k^{96}}{1-k}$$
$$97000=P(k^{96}+\frac{1-k^{96}}{1-k})$$
$$97000\div (k^{96}+\frac{1-k^{96}}{1-k})=P$$

amistre64 · Answer

thats better, lets try 252.35 a month

amistre64 · Answer

getting closer :)  had a typo in the calculator

amistre64 · Answer

http://www.wolframalpha.com/input/?i=97000%2F%28k%5E%2896%29%2B%281-k%5E%2896%29%29%2F%281-k%29%29%2C+k%3D1%2B.045%2F12 830.98 is my final offer lol

amistre64 · Answer

thats does seem to work out rather nicely