If you want to have $1,200 in 27 months, how much money must you put in a saving
ID: 2754990 • Letter: I
Question
If you want to have $1,200 in 27 months, how much money must you put in a savings account today? Assume that the savings account pays 14% and it is compounded monthly. If you want to have $1,200 in 27 months, how much money must you put in a savings account today? Assume that the savings account pays 14% and it is compounded monthly. If you want to have $1,200 in 27 months, how much money must you put in a savings account today? Assume that the savings account pays 14% and it is compounded monthly.Explanation / Answer
USE Future value method
Future value = amount today*(1+ interest rate/12)^n
$1200 = A*(1+0.14/12)^27
$1200 = A*(1.01167)^27
$1200=A*1.3678
$1200/1.3678=A
A=$877.34
A = $880 if you require answer round nearest to $10.