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Homework answers / question archive / You and your new spouse each bring home $1600 each month after taxes and other payroll deductions

You and your new spouse each bring home $1600 each month after taxes and other payroll deductions

Finance

You and your new spouse each bring home $1600 each month after taxes and other payroll deductions. By living frugally, you intend to live on just one paycheck and save the other in a mutual fund yielding 7.84% compounded monthly. How long will it take to have enough for a 20% down payment on a $175,000 condo in the city?

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Computation of it will take to have enough for a 20% down payment on a $175,000 condo in the city using NPER Function in Excel:

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

Here,

NPER = Number of Periods = ?

Rate = 7.84%/12 = 0.653% compounded monthly

PMT = $1,600 each month

PV = 0

FV = $175,000*20% = $35,000

Substituting the values in formula:

=nper(0.653%,1600,0,-35000)

NPER or Number of Periods = 20.51 months or 1.71 years

 

So, it will take 1.71 years to have enough for a 20% down payment on a $175,000 condo in the city

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