Sandy is offered an annuity at 3.9% compounded monthly to save the $12000 she need over the next 6 yrs what would the monthly payments be
To find the monthly payments for an annuity, we can use the formula for the present value of an ordinary annuity:
PV = PMT x [1 - (1 + r)^(-n)] / r
Where:
PV = Present value (the amount Sandy needs to save, which is $12000)
PMT = Monthly payment
r = Monthly interest rate (3.9% / 12 = 0.00325)
n = Number of periods (6 years x 12 months = 72)
Let's plug the values into the formula and solve for PMT:
12000 = PMT x [1 - (1 + 0.00325)^(-72)] / 0.00325
To solve this equation, we can use a financial calculator or an online financial calculator. Alternatively, we can use a spreadsheet software like Microsoft Excel with the PMT function.
Assuming you are using a calculator or spreadsheet software to solve the equation, you'll find that the monthly payment (PMT) required for Sandy to save $12000 over 6 years at an interest rate of 3.9% compounded monthly would be approximately $165.56.