You plan to buy a house in 4 years

Finance Oct 15, 2020

You plan to buy a house in 4 years. You want to save money for a down payment on the new house. You are able to place $311 every month at the end of the month into a savings account at an annual rate of 5.11 percent, compounded monthly. How much money will be in the account after you made the last payment?

Expert Solution

Computation of Accumulated Amount using FV Function in Excel:

=-fv(rate,nper,pmt,pv)

Here,

FV = Future Value or Accumulated Amount = ?

Rate = 5.11%/12 = 0.4258% compounded monthly

Nper = 4 years * 12 months = 48 months

PMT = Monthly Savings = $311

PV = 0

Substituting the values in formula:

=-fv(0.4258%,48,311,0)

FV or Future Value = $16,524.25

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