3
QuizMultiple Choice

Topic Test

Question 3 • FT GMS AMDM B IC – 72

You want to purchase a new car in 3 years and you anticipate the cost of the car to be $25,000. You are given an investment plan with a fixed APR of 5.3% if you make regular monthly deposits. How much should you deposit at the end of each month to reach your goal of $25,000 in 3 years?

Answer
A
$642.23
B
$645.65
C
$648.62
D
$649.13

Explanation

For deposits made at the end of each month, use the future value of an ordinary annuity: 25,000 = PMT × [((1 + 0.053/12)^36 − 1)/(0.053/12)]. Solving gives a monthly deposit of about $642.23. So the correct choice is $642.23.

AI-written and checked against the verified answer.

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