Calculating Monthly Deposits for Future Annuity Goal

[Niaboc67]

Homework Statement

Mike needs $12.000 in 5 years. How much must he deposit at the end of each month for 5 years in an account paying 2.9% compounded monthly so that he will have $12.000 in 5 years?

Homework Equations

FV formula: S=R*((1+i)^n -1)/i

I think that is the correct formula

The Attempt at a Solution

Honestly i don't have a clue on this...please help!

 

[tiny-tim]

Hi Niaboc67!

(try using the X² and X₂ buttons just above the Reply box

FV formula: S=R*((1+i)^n -1)/i

I think that is the correct formula

Yes, that is the correct formula,

because it equals R*∑_k=0^n-1 (1+i)^k. ​

However, you'll never remember that formula in the exam, so you need to be able to derive it yourself,

sooo …

i] can you prove that the two formulas are the same?

ii] can you see why the second formula works? ​

 

[Ray Vickson]

Homework Statement

Mike needs $12.000 in 5 years. How much must he deposit at the end of each month for 5 years in an account paying 2.9% compounded monthly so that he will have $12.000 in 5 years?

Homework Equations

FV formula: S=R*((1+i)^n -1)/i

I think that is the correct formula

The Attempt at a Solution

Honestly i don't have a clue on this...please help!

Well, if you know i and n you just have a computation to perform.

RGV