SOLUTION: Please help me with the homework: A university student plans to buy a second hand car costing R150000.00 in five years time. The student decides to invest money into an investment

Question 1196118: Please help me with the homework:
A university student plans to buy a second hand car costing R150000.00 in five years time. The student decides to invest money into an investment fund earns 10% p.a.compounded monthly. How much is the amount of money that he will need to pay into this investment fund every months?
Answer by math_tutor2020(3816) (Show Source): You can put this solution on YOUR website!

FV = future value = R150,000.00
r = annual rate = 0.10 = 10%
i = interest rate per month = r/12 = 0.10/12 = 0.00833333333333333 approximately
n = number of months = 5*12 = 60

Plug these values into the future value annuity formula
Solve for P
FV = P*( (1+i)^n - 1 )/i
150000 = P*( (1+0.00833333333333333)^60 - 1 )/0.00833333333333333
150000 = P*77.4370721734303
77.4370721734303P = 150000
P = 150000/77.4370721734303
P = 1937.05670669025
P = 1937.06

Answer: R1937.06 needs to be deposited every month.

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