The information in the table shows how much a specific monthly contribution will result in after 7 years of investment with a 4% annual interest rate, compounded monthly. If the goal is to have at least $7,000 after 7 years, what is the minimum amount that this investor should invest each month?
To find the minimum amount the investor should invest each month, we need to look for the value in the table that is equal to or greater than $7,000.
By observing the table, we can see that the closest value to $7,000 is $6,983.83, which corresponds to a monthly contribution of $100.
Therefore, the minimum amount the investor should invest each month is $100.
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Apologies for the mistake. Let's go through the calculation again.
From the table, we see that a monthly contribution of $100 results in a final value of $9,197.76 after 7 years.
To determine the minimum amount the investor should contribute each month to reach at least $7,000, we can use trial and error or use a financial calculator.
Using a financial calculator, we can set the present value (PV) to $0, the future value (FV) to $7,000, the number of periods (N) to 7 years, and the interest rate (I/Y) to 4% per year (or 0.04/12 = 0.00333 per month).
By calculating the monthly contribution (PMT), we find that the minimum amount the investor should invest each month is approximately $91.39.
Therefore, the minimum amount that this investor should invest each month to have at least $7,000 after 7 years is approximately $91.39.