Assume that inflation is 2.4% APR, compounded monthly

Assume that you are currently a sophomore. You want to have $10,000 in savings by the time you graduate on June 15, 2023. Because the economy is about to boom after Covid, you anticipate that you can save at 12% annually, compounded monthly. How much do you need to save each month, starting July 15 2021, to get to $10,000 in nominal terms by June 15, 2023?

b. How much do you need to save if you want $10,000 in real terms?

c. Which of the two answers is larger? Is that what one would expect? Why?

Answer rating: 100% (QA)

To calculate the amount needed to save each month to reach 10000 in nominal terms by June 15 2023 we ... View the full answer