Question

Michael earns $3,950 every month after taxes and deductions for social security and insurance. He puts $900 a month into savings. He wants to buy a $30,000 boat. He only has $11,000 saved up for this major purchase. He is willing to postpone the purchase for 2 years (24 months) in order to reach a savings goal of $30,000. Will Michael be able to afford the boat in two years if he continues to save $900 a month?

Answer 1

Yes, Michael will afford the boat

Step-by-step explanation:

So far Michael has saved $11,000.

The boats costs $30,000 to purchase.

Michael needs to raise $19,000 ($30,000 - $11,000) in two years to buy the boat.

Michael saves $900 per month. In 24 months he will have saved

=$900 x 24

=$21,600

Michael requires $19,000 but will have save $21,600 in two years. Therefore, he should be able to purchase the boat.