SOLUTION: A new car will cost $92,200. The dealership requires a 15% down payment. In order to save up the down payment, you set up an annuity with an annual interest rate of 4.4%. How much

Question 1202734: A new car will cost $92,200. The dealership requires a 15% down payment. In order to save up the down payment, you set up an annuity with an annual interest rate of 4.4%. How much will you need to deposit each month in order to have the down payment in 2 years?
Answer by math_tutor2020(3817) (Show Source): You can put this solution on YOUR website!

Answer: $552.32

Work Shown:

15% of $92,200 = 0.15*92200 = 13,830

The down payment is $13,830

Future value of annuity formula.

where,
FV = future value
P = periodic payment or deposit
i = interest rate per period (decimal form)
n = number of periods

In this case:
FV = 13830
P = unknown
i = 0.044/12 = 0.003666667 approximately
n = 12*2 = 24 months

You need to deposit $552.32 per month for 24 months (aka 2 years) to reach a goal of $13830.

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