Question

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 accumulated for his purchase?

Answer 1

Answer:

The future value of an annuity

Explanation:

The future value of an annuity formula is used to calculate what the value at a future date would be for a series of periodic payments. If the rate or periodic payment does change, then the sum of the future value of each individual cash flow would need to be calculated to determine the future value of the annuity