Answer:
Monthly deposit= $317.62
Explanation:
Giving the following information:
Zach wants to take his family on a cruise in 4 years and he estimates the cost of the cruise will be $16,500.
Annual interest rate= 3.99%
First, we need to determine the monthly interest rate:
monthly interest rate= 0.0399/12= 0.003325
Now, using the following variation of the future value formula, we can determine the monthly deposit:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
n=4*12= 48
i= 0.003325
FV= 16,500
A= (16,500*0.003325)/ [(1.003325^48)-1]
A= $317.62
