2
practice examMultiple Choice

Practice Exam

Question 2 • Mathematics for Data and Financial Literacy

Xin is planning to save $⁢300,000 in 10 years. The account has an annual interest rate of 4.5% compounded monthly. What is the required monthly deposit? Use the following formula: P=(F⁢V⋅(r)/(n))/((1+(r)/(n))^n⁢t−1)

Answer
A
1 dollars comma 984 point 1 5
B
1 dollars comma 890 point 9 4
C
2 dollars comma 433 point 6 7
D
2 dollars comma 444 point 6 4

Explanation

There are 12 monthly deposits per year, so the monthly interest rate is 0.045 ÷ 12 = 0.00375, and the total number of months is 12 × 10 = 120. Substituting into the formula gives P = 300,000(0.00375) ÷ ((1.00375)^120 − 1) ≈ $1,984.15. The required monthly deposit is $1,984.15, choice C.

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