Toby wants to buy a dirt bike in 5 years. If he saves $700 per month, what is the purchase price of the bike that he can afford in 5 years if he can receive an annual nominal interest rate of 3% compounding monthly in to a savings account?
the formula of future value is:-
given data are:-
x = payment per period (month) = 700
i = monthly interest rate = 0.03/12 = 0.0025
n= number of periods = (5*12) months = 60 [ as 1 year = 12 months]
the future value after 5 years be:-
the purchase price of the bike that he can afford in 5 years is $ 45252.70
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