What monthly deposit will produce a balance of Br 150,000 after 10 years? Assume that the annual percentage rate is 6% compounded monthly. Required: What is the total amount deposited over the 10-year period?

Answer 1

To find the monthly deposit required to produce a balance of Br 150,000 after 10 years, we can use the formula for the future value of a series of deposits:

FV = P * ((1 + r)^n - 1) / r

Where:
FV = Future value (Br 150,000)
P = Monthly deposit
r = Monthly interest rate (6% / 12 = 0.005)
n = Total number of months (10 years * 12 months/year = 120 months)

Plugging in the values, we have:
150,000 = P * ((1 + 0.005)^120 - 1) / 0.005

Simplifying the equation, we find:
150,000 = P * (1.005^120 - 1) / 0.005

150,000 * 0.005 = P * (1.005^120 - 1)

750 = P * (1 + 0.7938)

P = 750 / 1.7938
P ≈ 417.89

Therefore, a monthly deposit of approximately Br 417.89 will produce a balance of Br 150,000 after 10 years.

To find the total amount deposited over the 10-year period, we can multiply the monthly deposit by the total number of months:

Total amount deposited = Monthly deposit * Total number of months
Total amount deposited = Br 417.89 * 120
Total amount deposited = Br 50,146.80

Therefore, the total amount deposited over the 10-year period is approximately Br 50,146.80.