Question

Jake Jones wants to deposit $100 per month into an account earning 5 percent for the next 4 years so he can purchase a used car at that time. What type of computation would he use to determine the amount he will have for his purchase

Answer 1

Future value of an annuity

Step-by-step explanation:

It is the amount of a set of continuous installments up to a certain future date. It considering a fixed rate of return or Periodical payments. A higher interest rate provides a higher benefit of continuous payment.

Future value of an annuity =
`p[((1+r)^n-1)/(r) ]`

Where, p = payment per month

r = Rate of interest

n = number of periodic payment