7
QuizMultiple Choice

Present and Future Value — Quiz

Question 7 • Advanced Financial Algebra

Charlie opens a savings account offering a 4.5% annual interest rate, compounded monthly. He aims to save $⁢15,000 in the account in 5 years for a new car. How much does Charlie need to deposit each month to reach his financial goal of $⁢15,000 in 5 years? Round your answer to the nearest dollar. Periodic deposit future value formula: P=(A⁡((r)/(n)))/((1+(r)/(n))^n⁢t−1)

Answer
A
220 dollars
B
223 dollars
C
225 dollars
D
230 dollars

Explanation

Use the periodic deposit formula with A = $15,000, r = 0.045, n = 12, and t = 5. The monthly rate is 0.045 ÷ 12 = 0.00375, and there are 12 × 5 = 60 deposits. Substituting gives P = 15,000(0.00375) ÷ ((1.00375)^60 − 1) ≈ $223. The nearest-dollar deposit is $223, choice B.

AI-written and checked against the verified answer.

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