Question

You are saving money to buy a car. If you save $ 320 per month starting one month from now at an interest rate of 9​%, how much will you be able to spend on the car after saving for 5 ​years?

Answer 1

Answer:

$24135.72

Explanation:

Given pmt 320, r 9% n 5 years

This amount is paid monthly s\and there are 12 months in a year

r = 9%/12 =0.75%

n = 5* 12 =60

We will use the future value of annuity

FV = pmt *[(1+r)^n - 1/r)]

      = 320 *[(1+0.0075)^60-1/0.0075

       =$24135.72

Answer 2

Answer: $24,135.73

Explanation:

GIVEN the following ;

Payment per month(PMT) = $320

Rate(r) = 9% 0.09÷12 = 0.0075

Period(n) = 5 years = 60 months

Future Value (FV)

Future Value(FV) :

FV = PMT ×[ [ ((1 + r)^n) - 1] ÷ r]

FV = $320 ×[ [ ((1 + 0.0075)^60) - 1] ÷ 0.0075]

FV = $320 ×[ [ (1.0075^60) - 1] ÷ 0.0075]

FV = $320 × [( 0.5656810269415) ÷

0.0075]

FV = $320 × 75.424142588666

FV = $24,135.725628373

FV = $24,135.73