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Business Math

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If you want to save $25,000 for a down payment on a house and you have ten years to save this amount, how much would you need to save monthly to achieve this goal if the interest rate is 5% compounded monthly? What happens if you can increase your interest rate to 8%? Come up with your own example of compound interest different than the one in question.

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Solution Summary

The expert examines compounding interest for business math.

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In this problem, we are calculating the future value of an annuity.

Let C represent the amount of money saved every month, then:
FV = ...

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