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?
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.
