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The City Library ordered a new computer system costing $158,000; it will be delivered in 6 months. The full amount will be due 30 days after delivery. How much must be deposited today into an account paying 7.5% compounded monthly to have $158,000 in 7 months?

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pedrocarratore

Answer:

$151,257.12

Step-by-step explanation:

7.5% is the annual interest rate, the monthly interest rate is:

[tex]r= \frac{0.075}{12} =0.00625[/tex]

The amount (P) that must be deposited into an account at a rate 0.625% per month for 7 months in order to obtain $158,000 is given by:

[tex]158,000 = P*(1+0.00625)^7\\P=\$151,257.12[/tex]

$151,257.12 must be deposited into the account today.

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