Business Math

Nancy would like to accumulate $10,000 by the end of 3 years from now to buy a used car from her friend,Jin. She has $2,500 now and would like to save equal annual end of year deposits to pay for the car.

Calculate how much should she deposit at the end of each year in an account pay 8% interest to buy the car at the end of 3 years.

  1. 0
  2. 17
asked by Tracy
  1. Amount to save = 10,000-2500=7500
    Use the future value formula:
    A=F*(A/F,0.08,3)
    =F(i)/((1+i)^n-1)
    =7500*0.08/(1.08^3-1)
    =2310.25

    Note: each payment is even less than 7500/3=2500 because the first two payments earn interest at 8%.

    posted by MathMate

Respond to this Question

First Name

Your Response

Similar Questions

  1. math

    The Derr-McGee Manufacturing Company plans to build a new $50,000 warehouse seven years from now. They plan to accumulate the $50,000 in an account before beginning construction. If money is worth 7% compounded annually, how much
  2. maths

    Suppose that you want to buy a house 5 years from now, and you estimate that an initial down payment of $30,000 will be required at that time. To accumulate the $30,000, you wish to make equal annual end of year deposits into an
  3. math

    Monarch Distributing Ltd. plans to accumulate funds for the purchase of a larger warehouse eight years from now. If Monarch contributes $12,000 at the beginning of each month to an investment account earning 4.5% compounded
  4. finance

    Linda Scales is now employed as the managing editor of a well-known business journal. Although she thoroughly enjoys her job and the people she works with, what she would really like to do is open a bookstore of her own. She would
  5. accounting help please?!

    Nancy Sly wishes to sell her business and receives the following three offers:? 1. $568,000 cash immediately. 2. $200,000 cash now plus an annual installment of $60,000 at the end of each year for 10 years, a total of $800,000. 3.
  6. accounting help please?!

    Nancy Sly wishes to sell her business and receives the following three offers:? 1. $568,000 cash immediately. 2. $200,000 cash now plus an annual installment of $60,000 at the end of each year for 10 years, a total of $800,000. 3.
  7. Managerial Finance

    The IF for the future value of an annuity is 4.5 at 10% for 4 years. If we wish to accumulate 8,000 by the end of 4 years, how much should the annual payment be
  8. Math

    Jasica Parker would like to have ​$78 comma 000 to buy a new car in 8 years. To accumulate $ 78 comma 000 in 8 ​years, how much should she invest monthly in a sinking fund with 6 % interest compounded​ monthly?
  9. MATH

    Please help check my answers to make sure they are correct. I used the "sinking fund payment and present value of an ordinary annuity" formulas to solve this story problem. Thanks! Story: Naomi Dexter is 20 years old. She decides
  10. Math

    Please help check my answers to make sure they are correct. I used the "sinking fund payment and present value of an ordinary annuity" formulas to solve this story problem. Thanks! Story: Naomi Dexter is 20 years old. She decides

More Similar Questions