In 3 years from now you want to buy a new car. You expect the price...

Question

Question

In 3 years from now you want to buy a new car. You expect the price of the car of your dreams to be $55,000 (price
in 3 years).

How big are your equal monthly contributions to your savings account if you want to have enough
money saved to buy that car in 3 years?

Assume you start saving in two months from today and make your last
contribution in 3 years (i.e., monthly payments at t = 2, 3, 4, ..., 36).

Assume an APR of 6%, monthly compounded.

business finance

Answer 1

Answer #1

There will be total 35 payments.

Interest rate per month will be (6% / 12) = 0.5%.

Monthly payment contribution is calculated below:

Answer 2

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