Steve Wilson wants to deposit $150 per month into an account earning 4 percent for the next 3 years, so he can purchase a used car at that time. What type of computation would he use to determine the amount he will have for his purchase?

Question

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Steve is depositing a fixed amount of money ($150) each month for a fixed period of time (3 years) into an account earning interest (4%). This is an annuity. To determine the amount he will have for his purchase at the end of the 3 years, he would use the future value of an annuity computation.

Steve Wilson Wants to Deposit $150 Per Month into an Account