Emily has started a savings account for a new car She has de

Emily has started a savings account for a new car. She has decided to invest $500 a month at 0.25% interest. Will she have enough money to buy a $20,000 car after 3 years?

Solution

Future Value : F = (1 +r)*P[ {(1+r)^n -}/r]

r = 0.0025; P = 500 ; n = 12*3 = 36

F = 500(1.0025)[ ( 1.0025^36 -1)/0.0025

= 18857.31

= $ 18857.31

So, would not be able to buy the car