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Jane needs $9000 to buy a new car in four years. how much should she deposit at the end of each month into an account that earns 6% interest compounded monthly? a) $211.37 b) $147.00 c) $129.38 d) $166.37

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sqdancefan

Answer:

  a)  $166.37

Step-by-step explanation:

The amount in the account is the sum of 4·12 = 48 terms of a geometric sequence with first term P (the deposit value) and common ratio (1 + r/12). Using the formula for that sum, we have ...

  sum = P·((1 +r/12)^48 -1)/(r/12) . . . . . for interest rate r = .06 and sum = 9000.

  9000 = P(1.005^48 -1)/.005

  9000·0.005/(1.005^48 -1) = P ≈ $166.37

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