Lump sum equivalent to the monthly payments

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Reference no: EM13914561

Steve Lowe must pay his property taxes in two equal instalments on December 1 & April 1. The two payments are taxes for fiscal year that begins on July 1 & ends the following June 30. Steve purchased a home on September 1. Assuming the annual property taxes remain at $3400 per year for the next several years, steve plans to open a savings account and to make uniform monthly deposits the first of each month. The account is to be used to pay the taxes when they are due.

To open the account, Steve deposits a lump sum equivalent to the monthly payments that will not have been made for the first year's taxes. The savings account pays 3% interest, compounded quarterly (march 30, june 30, September 30, December 31) How much money should Steve put into the account when he opens it on September 1? What uniform monthly deposit should he make from that time on?

Reference no: EM13914561

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