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.© BrainMass Inc. brainmass.com October 2, 2020, 2:59 am ad1c9bdddf
In this problem, we are calculating the future value of an annuity.
Let C represent the amount of money saved every month, then:
FV = ...
The expert examines compounding interest for business math.