To calculate the monthly deposit amount, we can use the formula for future value of a series of deposits:
FV = Pmt * [(1 + r)^n - 1] / r
Where:
FV = Future Value ($30,000)
Pmt = Monthly Deposit
r = Monthly Interest Rate (5.5% / 12 = 0.00458)
n = Number of Months (20 years * 12 months = 240 months)
Substitute in the values and solve for Pmt:
$30,000 = Pmt * [(1 + 0.00458)^240 - 1] / 0.00458
$30,000 = Pmt * [9.4131]
Pmt = $30,000 / 9.4131
Pmt ≈ $3,186.16 / month
Therefore, Cassandra should deposit approximately $206.37 each month to reach her savings goal of $30,000 in 20 years with a 5.5% interest rate.
Cassandra opens a savings account, with the goal of saving $30,000 by making deposits each month for the next 20 years. If the account pays 5.5% interest, how much should Cassandra deposit each month?
$125.00
$68.87
$10,011.26
$206.37
$89,898.77
1 answer
1 answer