Question

Mary knows that she needs $30,000 for a down payment on a house. She found an investment that eams 3. 35% interest compounding monthly. She would like to purchase the home in 5 years. How much should she put in the account now to ensure she has her down payment? (1 point) b $29,501. 75 $25,379. 22 $20,096. 35 $35,462. 08 C Od​

Answer 1

The amount she put in the account now to ensure she has her down payment is $25,379. 22

Compound interest

The formula for calculating compound interest is expressed as:

A = P(1+r/n)^nt

GIven the following

A = 30000
r = 0.0335
t = 5

n = 12

Substitute

30000 = P (1+0.0335/12)^12(5)
30000 = P (1+0.0335/12)^12(5)

30000 = 1.18206P
P = 30000/1.18206
P =  $25,379. 22

Hene the amount she put in the account now to ensure she has her down payment is $25,379. 22

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