2. How much must you deposit today into an account with quarterly compounding interest and an APR of 6% in order to have $30,000 in 10 years for a down payment on a house? Assume no additional deposits are made. How much of the money saved is interest?

2. How much must you deposit today into an account with quarterly compounding interest and an APR of 6% in order to have $30,000 in 10 years for a down payment on a house? Assume no additional deposits are made. How much of the money saved is interest?

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

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Question

2. How much must you deposit today into an account with quarterly compounding interest and an APR of 6% in
order to have $30,000 in 10 years for a down payment on a house? Assume no additional deposits are made.
How much of the money saved is interest?

Expert Solution

Step 1

$(2)$ Given information

$A = $ 30, 000$

$A P R = 6 %$

$\Rightarrow r = \frac{6}{100} = 0.06$

Time $t = 10 y e a r s$

Since, rate of interest compounded quarterly

Hence, $n = 4$

Used formula:- $A = P {(1 + \frac{r}{n})}^{n t}$

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