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You plan to buy a house in 6 years
You plan to buy a house in 6 years. You want to save money for a down payment on the new house. You are able to place $271 every month at the end of the month into a savings account at an annual rate of 4.06 percent, compounded monthly. How much money will be in the account after you made the last payment? Round the answer to two decimal places. Show working & formula
Expert Solution
Computation of Future Value using FV Function in Excel:
=-fv(rate,nper,pmt,pv)
Here,
FV = Future Value = ?
Rate = 4.06%/12 = 0.338% compounded monthly
Nper = 6 years * 12 months = 72 months
PMT = $271
PV = 0
Substituting the values in formula:
=-fv(0.338%,72,271,0)
FV or Future Value = $22,051.88
So, $22,051.88 will be in the account after you made the last payment.
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