Question

Jessica wants to accumulate $14,000 by the end of 5 yr in a special bank account, which she had opened for this purpose. To achieve this goal, Jessica plans to deposit a fixed sum of money into the account at the end of the month over the 5-yr period. If the bank pays interest at the rate of 7% per year compounded monthly, how much does she have to deposit each month into her account?

Answer 1

i = .07/12 = .00583333
n = 12(5) = 60

let her payment be P

P( (1.00583333)^60 - 1)/.005833333 = 14000

solve for P

Answer 2

Suppose 12 people arrive at a bank at the same time. In how many ways can they line up to wait for the next available teller?