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Suppose you want to save in order to purchase a new boat. Take the APR to be 4.8%.

If you deposit $150 each month, how much will you have toward the purchase of a boat after three years?

 

I took 150 x 36 = 5400              4.8/100= 0.048/12= 0.004                          then 5400 x1.004^36 = 6234.583 = 6234.58

 

My answer is wrong can you help me figure out what I did wrong please?

Guest Apr 10, 2018
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 #1
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This is the formula you would use to calculate that:

 

FV=P{[1 + R]^N - 1/ R}, Where R=Interest rate per period, N=number of periods, P=periodic payment,  FV=Future value.

 

FV = 150 x {[1 + 0.048/12]^(3*12) -1 / 0.004}

FV = 150 x {[1 + 0.004]^36 - 1 / 0.004} 

FV = 150 x     1.004^36 - 1 / 0.004}

FV = 150 x      38.638108459.....

FV = $5,795.72 - this is how much you will have at the end of 3 years @ 4.8% comp.monthly.

Guest Apr 10, 2018
 #2
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Thanks now I remember use the future value formula!

Guest Apr 10, 2018

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