Question

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?

Answer #1

*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**

*** if you have any doubt regarding the problem please write it
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