Final answer:
To calculate the savings needed each month to buy a new sports car, you should use the future value of an annuity, which will factor in your regular savings, interest rate, and saving period. Present value is not relevant in this scenario as it is concerned with the current worth of a future sum.
Step-by-step explanation:
If you are saving the same amount each month to buy a new sports car when the new models are released, the financial concept that will help you determine the savings needed is the future value of an annuity. An annuity is a series of equal payments made at regular intervals, and the future value of an annuity calculates how much you will have in the future, given a certain number of payments at a certain interest rate.
Present value calculations, whether for a lump sum or an annuity, will tell you what a future sum of money is worth today. However, since you are looking to save over time to make a purchase in the future, it is the future value that is pertinent to your savings plan. To determine exactly how much you need to save each month, you would use the future value annuity formula that factors in the regular savings amount, the interest rate, and the number of periods you plan to save for.