You want to buy a new sports car 3 years from now, and you plan to...

You want to buy a new sports car 3 years from now, and you plan to save $4,200 per year, beginning immediately from today. You will deposit your savings in an account that pays 9.5% interest. How much will you have 3 years from now?

a. $11,973

b. $12,603

c. $13,267

d. $13,835

e. $15,149

Expert Solution

Time of deposit	FV factor (1+9.5%)^(3-t)	Deposit	Deposit * FV factor
0	1.3129	$ 4,200.00	$ 5,514
1	1.1990	$ 4,200.00	$ 5,036
2	1.0950	$ 4,200.00	$ 4,599
		Amount after 3 years	$ 15,149

Hence option E is the correct solution.

jeff jeffy answered 2 years ago

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You want to buy a new sports car 3 years from now, and you plan to...

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