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Math Help - Interest problem

  1. #1
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    Interest problem

    Your brother would like to have $29,000.00 in 3 years for the purchase of a new car. What monthly payment should he make into an account paying 6% per year compounded monthly to attain his goal?
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  2. #2
    MHF Contributor
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    You simply MUST learn to manipulate "Basic Principles".

    i = 0.06

    m = i/12 = 0.06/12 = 0.005

    a = 1+m = 1.005

    P is the desired payment.

    Now think about the 36 payments. The first will be credited interrest 36 times. The last only once. This gives.

    P(a^{36} + a^{35} + ... + a) = 29000

    Can you add up the Geometric Sequence in the parentheses?
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  3. #3
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    Nov 2008
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    Thank you!

    Yes, I *can* do that part. Sorry, I'm much more of an English person, to be honest. I was trying to match this problem with either Future/Present Annuity, Sinking Funds, Amortization, etc and didn't even think about using geometric progression.

    THANK YOU, TK. Thanks for your patience with me.
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