Final answer:
Without considering interest, to buy a $5,000 car next year, you need to save approximately $416.67 per month for 12 months. This calculation is based on the sinking fund approach, which helps you breakdown the total cost into equal monthly savings.
Step-by-step explanation:
To determine how much you need to save to buy a $5,000 car next year using the sinking fund approach, you need to consider the savings without accounting for interest, as the question does not provide an interest rate. Since it's for a time span of one year, the calculation is straightforward. You would simply save $5,000 over the course of the year. If you plan on saving the same amount each month, you would divide the total amount by 12 months.Explanation in more than 100 words:To achieve your goal of $5,000, you would divide this amount by 12. This results in approximately $416.67 per month. However, if interest were to be accounted for in this example, the amount you'd need to save monthly could be less, depending on the interest rate offered by your bank on a savings account. Since the question omits this detail, we will proceed with a zero interest assumption, meaning that you'd need to save the full $5,000 over the year. Other factors to consider would include bank fees or any additional costs that may affect the overall savings needed.Conclusion: With no interest rate provided, you would need to save $416.67 per month for 12 months to accumulate $5,000 by the end of the year, which would allow you to purchase the car outright.