document.write( "Question 1123271: Rhonda needs to have $2500 in three and a half years. What monthly investment will she have if her bank offers a 4.8% interest rate, compounded monthly? \n" ); document.write( "

Algebra.Com's Answer #739576 by ikleyn(52790) $\"\"$ $\"About$

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\n" ); document.write( "Rhonda needs to have $2500 in three and a half years. What monthly investment will she have
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document.write( "This problem is about a monthly payment for Ordinary Annuity saving plan.\r\n" );
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document.write( "Tutor @Theo misread the condition and mistakenly used another formula, which is not relevant to given condition, \r\n" );
document.write( "therefore, he obtained incorrect answer. \r\n" );
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document.write( "The correct formula for the Ordinary Annuity saving plan is\r\n" );
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document.write( "f = ,\r\n" );
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document.write( "f is the future value\r\n" );
document.write( "p is the monthly payment\r\n" );
document.write( "r is the interest rate per time period\r\n" );
document.write( "n is the number of time periods.\r\n" );
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document.write( "In your problem:\r\n" );
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document.write( "time periods are months.\r\n" );
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document.write( "f = 2500\r\n" );
document.write( "p = what you want to find\r\n" );
document.write( "r = 4.8% / 100 / 12 = .004 per month\r\n" );
document.write( "n = 3.5 * 12 = 42 months\r\n" );
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document.write( "formula becomes 2500 = \r\n" );
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document.write( "solve for p to get:\r\n" );
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document.write( "p =  = 54.78\r\n" );
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document.write( "she would have to deposit $54.78 monthly in order to have $2500 in 3.5 years at 4.8% per year compounded monthly.\r\n" );
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document.write( "Interesting, that her total direct deposit will be only  $54.78*42 = 2300.76.\r\n" );
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document.write( "The rest is what the account will earn due to compounded percentage.\r\n" );
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\n" ); document.write( "\n" ); document.write( "On Ordinary Annuity saving plans see the lessons\r
\n" ); document.write( "\n" ); document.write( " - Ordinary Annuity saving plans and geometric progressions\r
\n" ); document.write( "\n" ); document.write( " - Solved problems on Ordinary Annuity saving plans \r
\n" ); document.write( "\n" ); document.write( "in this site.\r
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