Finding the periodic payment needed to meet an investment goal
You know the target and the deadline; find the deposit. The annuity formula from Q6, solved for PMT.
A short walkthrough explaining what you need to know and how to solve this question type lands here once it's recorded.
ALEKS randomizes the numbers each attempt, but the question shape stays the same. Here are three example versions you might see.
Leila invests in an ordinary annuity earning 4.8% compounded monthly, paying in at the end of each month.
How much must she pay in each month for the annuity to be worth $10,000 after 4 years? Type just the number.
Do not round intermediate computations; round the final answer to the nearest cent.
The Byrnes pay into an ordinary annuity at the end of every quarter. It earns 5.5% compounded quarterly.
What quarterly payment reaches $50,000 in 10 years? Type just the number.
Do not round intermediate computations; round the final answer to the nearest cent.
A student needs $6,000 in 3 years and will pay monthly into an annuity at 7.2% compounded monthly.
Find the monthly payment. Type just the number.
Do not round intermediate computations; round the final answer to the nearest cent.
Rosa wants $25,000 in 5 years for a deposit on a house. Her account pays 6% compounded monthly and she will deposit the same amount at the end of every month.
How much must she deposit each month?
Periodic rate and payment count
Build the bracket
Divide the goal by the factor
Where the money comes from
Rosa deposits $358.32 a month. Over five years that is $21,499.20 of her own money; the remaining $3,500.80 is interest.
That gap is the entire point of the question. Dividing the goal by the number of payments would have had her save $416.67 a month — nearly $60 more than she needs, every month, for five years.