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Howard is saving for a holiday. He deposits a fixed amount every month in a bank account with an EAR of 14.7%. If this account pays interest every month then how much should he save from each monthly paycheck in order to have $14,000 in the account in four years' time?

A) $176

B) $308

C) $220

D) $352

Respuesta :

mirianmoses

Answer:

C) $220

Explanation:

First calculate the APR using an EAR of 14.7% and monthly compounding,

which comes to 13.7937 %. Then using a periodic rate of 13.7937 /12, calculate

the payment over 48 months that gives a future value (FV) of $14,000 , which is

$110.15.