In order to accumulate enough money for a down payment on a studio apartment, a freshman student deposits 200 usd per month in an account that pays 6% compounded monthly. 

a) How much will the student have in the account at the end of 4 years, that is, at the time of graduation?

Which formula did you use here? a) Simple Interest b) Compound Interest c) Future Value d) Present Value

b) When she graduates, what is the highest price of a studio apartment that she can buy (with mortgage) if 5% down payment is required?

c) Suppose she cannot find a studio apartment at this price (or lower). Instead, she rents a room in a shared apartment (with others) for 500 usd per month. How many months can she pay the rent with her accumulated money, which continues to earn interest in the same account?

Which formula did you use here? a) Simple Interest b) Compound Interest c) Future Value d) Present Value

Answer rating: 100% (QA)

Answer a Amount available at the end of 4 years 1081957 Calculation as below Formula used here is Fu... View the full answer