00:01
All right.
00:02
This problem asks us to consider a future value situation of an annuity, or future value of an annuity situation.
00:13
We are saving up for a new car that we want to buy in four years, and we will need $20 ,000 at the end of that period.
00:20
We can get 4 .5 % apr from our bank.
00:24
That's our given data.
00:27
And the question asks, how many dollars do we need to contribute each person? month to meet that goal.
00:33
So first of all, we are given the apr, but what we really need is the monthly rate.
00:39
So let me unhide that.
00:42
And to get the rate from the apr, you simply divide it by 12, as long as there are no bank fees and other hidden costs.
00:51
And then we're given the period or the number of periods in years, but what we really want is monthly periods.
01:00
So just to just about.
01:01
Or multiplied 4 by 12.
01:05
And then we're going to use the present value of an annuity formula, which looks kind of like this in sheets.
01:13
We don't have the ability to do superscript formatting, unfortunately, in sheets...