Answer: his investment will be worth $1606.5 after 3 years
Step-by-step explanation:
We would apply the formula for determining future value involving deposits at constant intervals. It is expressed as
S = R[{(1 + r)^n - 1)}/r][1 + r]
Where
S represents the future value of the investment.
R represents the regular payments made(could be weekly, monthly)
r = represents interest rate/number of interval payments.
n represents the total number of payments made.
From the information given,
R = $250
r = 0.04/2 = 0.002
n = 2 × 3 = 6
Therefore,
S = 250[{(1 + 0.02)^6 - 1)}/0.02][1 + 0.02]
S = 250[{(1.02)^6 - 1)}/0.02][1.02]
S = 250[{(1.126 - 1)}/0.02][1.02]
S = 250[{0.126}/0.02][1.02]
S = 250[6.3][1.02]
S = 250 × 6.426
S = $1606.5
