Answer to Question #161169 in Financial Math for Ndlp

Question

Marcel would like to take a vacation to Mexico during March break, 6 months from today. The trip will cost $3600. Marcel deposits $195 into an account at the end of each month for the next 8 months at 9%/a compounded monthly. Will he have enough money to pay for his trip? Explain.

Answer 1

Compound interest formula with top-up S_n=S_n-1(1+0.09/12)+P, P=195 , Sn - deposit amount,

n - mounth. Then

S₁=391.46 S₂=589.40 S₃=788.82 S₄=989.74 S₅=1192.16 S₆=1396.10 S₇=1601.57 S₈=1808.58

S₉=2017.15 S₁₀=2227.27 S₁₁=2438.98 S₁₂=2652.27 S₁₃=2867.16 S₁₄=3083.67

S₁₄ - amount after 14 mounth of deposit. Money won't be enough.