To get the type of car that Sandy can afford after 3 years, we find the future annuity of the his yearly deposits. amount deposited by Sandy in a month is $260 amount deposited per year=260*12=$3120 time=3years rate=7.8%
Fv of annuity= P[(1+r)^n-1]/r substituting our values we get Fv=3120[(1+0,078)^3-1]/0.078 =10109.06208 The value of a car he can drive is $10109.06208
