It is 1 July, 2013. On 1 July, 2011 you received an inheritance of $1000 which you deposited into a savings account earning 6% p.a. compounded monthly. You need plan to buy a house and you want to save $20000 for a deposit by1 July 2014. You will use your inheritance as part of this deposit. You also want to take an overseas holiday leaving 1 July 2016, which will cost $8000. You decide to set up a regular saving plan to fund these two expenses and you will start saving next month. You expect the 6% p.a. compounded monthly rate will remain constant over the life of your investment. How much will you need to save on a monthly basis to do this? Draw a timeline and show all your workings. Check your answer. Using the monthly savings you just calculated, how much will you have in the account on 1 July 2014? Is this enough for you to put the $20000 on the house? If not, you have done the calculation incorrectly.

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Future Value FV of an annuity can be calculated as P 1 rn 1 r Where P Monthly payment r Mon... View the full answer