Question

Jose received $400 for his birthday from his family. He wishes to buy a motorcycle and decides to use his birthday money towards it. He'd like to have a bigger down payment so he invests his money in a saving account that pays 6% per year compounded quarterly. If Jose purchases the motorcycle in 3 years, how much will he have available towards the down payment for his motorcycle?

Answer 1

Answer:

The correct answer is Future value with compound interest and $478.25.

Explanation:

According to the the scenario, the given data are as follows:

Present value (PV) = $400

Rate of interest = 6%

Rate of interest ( compounded quarterly) (rate) = 1.5%

Time period = 3 years

Time period ( compounded quarterly) ( Nper) = 12

So, we have to calculate Future value with compound interest because it is asking for a amount after 3 year.

So, we can calculate the future value by using financial calculator.

The attachment is attached below.

So, FV = $478.25