Top Posters
Since Sunday
g
2
Home Q & A Board Science-Related Homework Help Mathematics
New Topic  
ikrabbe ikrabbe
wrote...
Go to Answer
Posts: 324
Rep: 0 0
7 years ago
Sam got a job at the Brick. He plans to save $500 every month for 3 years to buy a car. The savings account earns 2.25% compounded monthly. If he puts the money in his savings account at the end of each month, what will be the present value of the balance in the account at the end of the three-year term?
A) $18 000.00
B) $18 408.04
C) $18 603.37
D) $27 284.81
E) $17 390.19
Textbook 
Contemporary Business Mathematics with Canadian Applications

Contemporary Business Mathematics with Canadian Applications


Edition: 11th
Authors:
Read 434 times
4 Replies
Replies
Answer verified by a subject expert
josanjosan
wrote...
#1
Posts: 361
Rep: 189 2
7 years ago
Sign in or Sign up in seconds to unlock everything for free
More solutions for this book are available here
1

Related Topics

Anonymous
wrote...
#2
2 years ago
Answer is $17,392.96

Annual interest rate = 2.25% compounded semiannually

Semiannual interest rate = 2.25% / 2
Semiannual interest rate = 1.125%

Effective annual rate = (1 + Semiannual interest rate)^2 - 1
Effective annual rate = (1 + 0.01125)^2 - 1
Effective annual rate = 1.022627 - 1
Effective annual rate = 0.022627 or 2.2627%

Monthly interest rate = (1 + Effective annual rate)^(1/12) - 1
Monthly interest rate = (1 + 0.022627)^(1/12) - 1
Monthly interest rate = 1.001866 - 1
Monthly interest rate = 0.001866 or 0.1866%

Monthly deposit = $500
Time period = 3 years or 36 months

Present value = $500/1.001866 + $500/1.001866^2 + … + $500/1.001866^35 + $500/1.001866^36
Present value = $500 * (1 - (1/1.001866)^36) / 0.001866
Present value = $500 * 34.785919
Present value = $17,392.96
Anonymous
wrote...
#3
A year ago
Help! The answer is missing an explanation...
wrote...
#4
Educator
A year ago
I am getting (C):
New Topic      
Quick Reply
Bold
Italic
Underline
Strikethrough
Subscript
Superscript
Insert Math Equation
Font Name
Font Color
Align left
Center
Align right
Bullet list
Numbered list
Insert a horizontal rule
Insert a table
Insert a Quote
View source
Explore
Post your homework questions and get free online help from our incredible volunteers
  1550 People Browsing
Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook
Related Images
  
 185
  
 267
  
 330