10. Jocelyne wants to save $20,000 towards the purchase of a new-to-her car in five years so she won't need to borrow as much to pay for it. She found a local credit union that offers a money market fund with an APR of 6% compounded monthly.

a. How much will she need to deposit each month so she has $20,000 in the account in 5 years? Write the formula used from the Financial Management Unit Formula Sheet, and show the values substituted into the formula. Calculate the result. Round your answer to the nearest whole cent. To earn credit you must show your work.(6 points)

Future Value =

20000

Interest rate compounded monthly (r )=

6%

or 0.005

This rate is annual rate compounded monthly.

So, Effective interest rate per year = (1+ r/m)^m- 1

Effective Annual interest rate = ( (1 + 0.005/12)¹²} - 1

Effective Annual interest rate =

0.005

Effective Monthly Interest rate = 0.005/12 =

0.006

Time period = 5 years

Compounding is monthly. So total monthly periods = 5 *12 =

60

Present Value = Future Value / (1+r)ⁿ

.= 20000 / (1+0. 006)^60

$17,835.43

b. Calculate the total amount that Jocelyne deposited into the account during the 5 years. To earn credit you must show your work.(2 points)

c. What percent of the accumulated balance is made up of interest? Round to the nearest tenth percent. To earn credit you must show your work.