Louis and Claire just had a baby girl. They decide to make monthly contributions to a guaranteed investment certificate (GIC) in order to give her $40,000.00 for her post-secondary education. The interest on the investment is calculated at 3.5% compounded monthly for 18 years
Determine Louis and Claire’s monthly contribution.
N=360 18*12 = 216
I = 3.5
PV = 40000 No, required FUTURE accumulation is 40k
PMT = - 249 (monthly contribution) Solve for this and expect a positive number
FV =0 40k
C/Y = 12