Jenna would like to purchase a new car in three years. If she saves $1000 per year in an account that pays 8% annual interest for the next 3 years, how much will she have saved for a down payment? (Round the final answer to the nearest dollar.) Values for i = 8%, n = 3
$$\begin{array} { | l | r| }
\hline \text { Present value of an ordinary annuity of } \$ 1 & 2.577 \
\hline \text { Present value of } \$ 1 \text { : } & .772 \
\hline \text { Future value of an ordinary annuity of } \$ 1 & 3.246 \
\hline \text { Future value of } \$ 1 : & 1.260 \
\hline
\end{array}$$

Question

Jenna would like to purchase a new car in three years. If she saves $1000 per year in an account that pays 8% annual interest for the next 3 years, how much will she have saved for a down payment? (Round the final answer to the nearest dollar.) Values for i = 8%, n = 3
$$\begin{array} { | l | r| } 
\hline \text { Present value of an ordinary annuity of } \$ 1 & 2.577 \
\hline \text { Present value of } \$ 1 \text { : } & .772 \
\hline \text { Future value of an ordinary annuity of } \$ 1 & 3.246 \
\hline \text { Future value of } \$ 1 : & 1.260 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The future value of an ordinary annuity formula should be used since Jenna is making regular savings. Given the annual interest rate of 8% and saving $1000 per year for 3 years, the future value of an ordinary annuity of $1 is 3.246. Therefore, Jenna will have $1000 * 3.246 = $3246 saved for a down payment.

Jenna Would Like to Purchase a New Car in Three