John wants to have a $10 000 down payment for his car in three years.If he puts away $7000 today and gets a 12.7% annual return,he will have the money he needs.

Question

Quizplus · Accepted Answer

Using the formula for compound interest, we can calculate the future value of John's initial investment of $7000 after three years:

FV = PV x (1 + r)^n
FV = 7000 x (1 + 0.127)^3
FV = 7000 x 1.455
FV = 10,185

The future value of his investment is $10,185, which is more than the $10,000 down payment he needs for his car. Therefore, John will have the money he needs in three years if he puts away $7000 today and earns a 12.7% annual return.

John Wants to Have a $10 000 Down Payment for His