Question

Tyrone wants to spend $15,000 on a new car three years from now. He opens a savings account and deposits $3,250 today. One year from now, he plans to deposit $3,000 in the account, and one year after that, he plans to deposit another $3,000. If the account earns 6% interest per year, how much additional money will Tyrone need to meet his $15,000 goal?

Answer 1

Tyrone will need $4578.4 to meet his $15,000 goal

Step-by-step explanation:

Tyrone wants to spend amount on a new car three years from now=$15,000

Formula :
`A=P(1+(r)/(100))^n`

Where A=future value

P=present value

r=rate of interest

n=time period.

Future value of deposits=
`3250 *(1.06)^3+3000 *(1.06)^2+3000 * (1.06)`

Future value of deposits= 10421.60

So, additional money needed=15000-10421.60=4578.4

Hence Tyrone will need $4578.4 to meet his $15,000 goal