Answer:
Quarterly deposit= $1,912.17
Explanation:
Giving the following information:
The van he is looking to buy in costs $33,000.
Interest rae= 4% per year compounded quarterly
Number of years= 4 years
First, we need to calculate the real interest rate:
Interest rate= 0.04/4= 0.01 per quarter
Now, to calculate the quarterly deposit, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= quarterly deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= (33,000*0.01) / [(1.01^16)-1]
A= $1,912.17
