Based on an average cost per year to attend a university or college of your choice, how much should be invested each month to obtain the goal of that amount (the goal is 40,000$)? Assume 6%/a compounded monthly for 5 years.
I don't need the answer, just the formula please!
FVoa = PMT [((1 + i)n - 1) / i]
where i= .06/12
PMT is the monthly payment
n is the number of periods, n=12*5 here
solve for pmt
I get about 570 dollars per month
Thank you so much!
To calculate the monthly investment needed to reach a goal amount, you can use the formula for future value of an investment:
FV = PV * (1 + r/n)^(n*t)
Where:
FV = future value (goal amount)
PV = present value (monthly investment)
r = annual interest rate (6%)
n = number of compounding periods per year (12 for monthly compounding)
t = number of years (5 years)
In your case, the goal amount is $40,000 and you want to find the monthly investment (PV). Rearranging the formula, we get:
PV = FV / ((1 + r/n)^(n*t))
Substituting the given values into the formula:
PV = $40,000 / ((1 + 0.06/12)^(12*5))
Thus, the formula to calculate the monthly investment needed is:
Monthly investment = $40,000 / ((1 + 0.06/12)^(12*5))