Assume that an individual puts $10,000 into a savings account that pays 3% interest compounded monthly with the intent to withdraw the balance in 5 years to buy a car.If he does not make any further deposits over this period,how much will the individual be able to put towards his purchase?
A)$10,125.63
B)$11,592.74
C)$11,616.17
D)$58,916.03

Question

Quizplus · Accepted Answer

We can use the formula A=P(1+r/n)^(nt) where A is the final amount, P is the initial amount, r is the interest rate, n is the number of times the interest is compounded per year, and t is the time period in years.

Plugging in the given values, we get:

A = 10,000(1+0.03/12)^(12*5)
A = 11,616.17

Therefore, the individual will be able to put $11,616.17 towards the car purchase. Option C is the correct answer.

Assume That an Individual Puts $10,000 into a Savings Account