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After getting her first job, a college graduate wants to begin saving money so she can pay cash for a new car. She wants to save enough each month to have $21,000 at the end of 4 years, and her savings account pays 4% interest, compounded monthly. How much will she have to save each month to reach her goal? Express your answer in $ to the nearest whole $.

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TomShelby

Answer:

The monthly payment for the student willbe of 404.16 dollars

Explanation:

We have to solve for the monthly payment of a future value annuity

[tex]PV \div \frac{(1+r)^{time} -1}{rate} = FV\\[/tex]

FV 21,000

rate 4% / 12

time 4 years x 12 month per year

[tex]21000 \div \frac{1-(1+0.00333)^{-48} }{0.00333} = C\\[/tex]

C  $ 404.160

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