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    Calculating the desired amonut of investment

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    Jane Alexander currently has $6,750 in a money market account paying 6.35 percent annually. She plans to use this amount and her savings over the next 8 years to make a down payment on a house. She estimates that she will need $20,000 in 8 years.

    How much should she invest in the money market account each year for the next 8 years to achieve her objective?

    How much would she need as a lump sum payment to compound to $20,000 in 8 years at 6.35% annual rate?

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    https://brainmass.com/business/accounting/calculating-desired-amount-investment-502779

    Solution Preview

    How much should she invest in the money market account each year for the next 8 years to achieve her objective?

    She deposits R amount per year.
    Current ...

    Solution Summary

    Present value of annuity concept is widely used in determining the periodic savings/installments. This concept is used to determine the annual investment needed to meet the given financial objective. Calculations are carried out with the help of suitable formulas.

    $2.19

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