Answer:
a) For this case we know that the person saves 60 per month and in a year can save:
b) For this case we can use the formula for the compound interest given by:
Where:
A= represent the future value
P=720 the present value
i= 5% =0.05 the interest rate
n=1 the number of times that the interest is effective in a year
t= 8 represent the number of years
And after replace we got:
So the future value of this annual amount would be 1063.77
Explanation:
Part a
For this case we know that the person saves 60 per month and in a year can save:
Part b
For this case we can use the formula for the compound interest given by:
Where:
A= represent the future value
P=720 the present value
i= 5% =0.05 the interest rate
n=1 the number of times that the interest is effective in a year
t= 8 represent the number of years
And after replace we got:
So the future value of this annual amount would be 1063.77