You want to purchase a new car in 8 years and expect the car to cost ​$21,000. Your bank offers a plan with a guaranteed APR of 5.5 % if you make regular monthly deposits. How much should you deposit each month to end up with ​$21,000 in 8 ​years?

You should invest ​$_____ each month.

1 answer

Assuming your interest rate of 5.5% is compounded monthly to match the payment period,
i = .055/12 = .0045833..
n = 8(12) = 96
monthly payment --- p
p(1.00458333..^96 - 1)/.00458333... = 21000
solve for p
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