The future value with compound interest is the correct answer. By using the formula for compound interest and plugging in the given values, we can calculate that Jose will have approximately $377.50 available towards the down payment for his motorcycle after 3 years of investing his birthday money.
The correct answer is a) Future Value with compound interest.
To calculate the future value of the amount Jose will have available towards the down payment for his motorcycle, we can use the formula for compound interest:
Future Value = Principal ×
In this case, the principal is $350, the interest rate is 3%, compounded quarterly (so n = 4), and the time is 3 years. Plugging in these values into the formula:
Future Value = $350 ×
Using a calculator or spreadsheet, we can calculate that the future value is approximately $377.50.
Therefore, Jose will have approximately $377.50 available towards the down payment for his motorcycle after 3 years of investing his birthday money in a savings account with compound interest.
Complete Question :
Jose received $350 for his birthday from his family. He wishes to buy a motorcycle and decides to use his birthday money towards it. He'd like to have a bigger down payment so he invests his money in a saving account that pays 3% per year compounded quarterly. If Jose purchases the motorcycle in 3 years, how much will he have available towards the down payment for his motorcycle?
a) Future Value with compound interest
b) Simple Interest
c) Present Value with compound interest
d) Effective Rate
e) Future Value with simple interest
f) None of the above.