Quote:

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

P/Y =12

C/Y = 12