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A person is planning to open a savings account with the intent to buy a house in 5 years. They will invest an equal amount each month for 5 years. This account will earn 6% per year(.5% per month)and will have $300,000 at the end of 5 year term. What is the amount of the monthly investment?

A. 4169

B. 4435

C. 4300

D. 5296

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facundobuzzetti

Answer:

The correct answer is C: $4300

Explanation:

Giving the following information:

They will invest an equal amount each month for 5 years.

This account will earn 6% per year(0.5% per month)and will have $300,000 at the end of the 5-year term

We need to use the following formula:

final value= {A[(1+i)^n-1]}/r

A= cuota

i= monthly interest

n= 60 months

Isolating A:

A= (FV*i)/[(1+i)^n-1]

A= (300000*0.005)/[(1.005^60)-1]

A= 1500/0.34885= 4300