Question

Suppose you'd like to save enough money to pay cash for your next car. The goal is to save an extra $26,000 over the next 3 years. What amount must be deposited
quarterly into an account that earns 4.4% interest in order to reach your goal? Round your answer to the nearest cent, if necessary.
​

Answer 1

Answer:

Quarterly deposit= $2,038.69

Step-by-step explanation:

Giving the following information:

Future value (PV)= $26,000

Number of periods (n)=  3*4= 12 quarters

Interest rate (i)= 0.044/4= 0.011

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= (26,000*0.011) / [(1.011^12) - 1]

A= $2,038.69