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Katyanochek1 [597]
3 years ago
5

Stuart wishes to have $14,000 to buy a used car three years from now. He plans to accomplish this, through an account with a nom

inal interest rate of 3% compounded monthly, by depositing $300 at the end of each month during the first year, and Q at the end of each month during the second two years. What is the smallest Q that will suffice?
Business
1 answer:
nataly862011 [7]3 years ago
8 0

Answer:

The smallest Q that will suffice is 409.86

Explanation:

Since Future value of payments = 14000

300*[(1 + 3%/12)^12 - 1]/3%/12*(1 + 3%/12)^24 + Q*[(1 + 3%/12)^24 - 1]/3%/12 = 14000

Q*[(1 + 3%/12)^24 - 1]/3%/12 = 14000  - 300*[(1 + 3%/12)^12 - 1]/3%/12*(1 + 3%/12)^24

Q = 409.86

Therefore, The smallest Q that will suffice is 409.86

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