clarence has $20, 000 in the bank. He wants to create an investment to pay his $230 monthly car insurance payment for four years, with the first payment dude in one month. How much of his $20, 000 should he invest now at %8.25 per annum, compounded monthly?

Answer 1

230/mo * 48mo = 11040 = amt. to be
saved inc. interest.
n = 48 = the number of compounding
periods.
r = (8.25/12) /100 = 0.006875 = MPR =
Monthly percentage rate.
Po = 10^X.
X = log(Pt)-n*log(r+1)
X = log(11040) - 48*log(1.006875) =
X = 4.043 - 0.1428 = 3.900.
Po = 10^X = 10^3.90 = 7945.89 =
Initial investment.