Question

Tyrone wants to spend $15,000 on a new car three years from now. He opens a savings account and deposits $3,250 today. One year from now, he plans to deposit $3,000 in the account, and one year after that, he plans to deposit another $3,000. If the account earns 6% interest per year, how much additional money will Tyrone need to meet his $15,000 goal?

Answer 1

Answer:

Tyrone will need $4578.4 to meet his $15,000 goal

Explanation:

Tyrone wants to spend amount on a new car three years from now=$15,000

Formula : $A=P(1+\frac{r}{100})^n$

Where A=future value

P=present value  

r=rate of interest

n=time period.

Future value of deposits=$3250 \times(1.06)^3+3000 \times(1.06)^2+3000 \times (1.06)$

Future value of deposits= 10421.60

So, additional money needed=15000-10421.60=4578.4

Hence  Tyrone will need $4578.4 to meet his $15,000 goal