Suppose you would like to get into the housing market in 3 years. Your goal is to save $20,000 towards a down payment so you open a savings account with an initial deposit of $1000. Your savings account pays an annual rate of interest of 5% compounded monthly. Can you reach your goal if you deposit $500 per month?

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Lets calculate the EAR for 5 rate compounded month... View the full answer