Question

Bella is planning to begin a savings program so that she can buy a car soon after her graduation from college. If after graduation, Bella begins saving $240 each month in an investment earning 6%, what will be the value of her fund after 3 years of saving?

Answer 1

Answer:

Value of her fund after 3 years of saving is $3446.34$

Explanation:

Let the rate of interest be applicable on yearly basis.

Given

Principal money $= 240$ dollar per month

So yearly she deposit

$240 * 12 \\= 2880$

dollar per year

time period is three years

As we know that

$A = P (1+\frac{r}{n} )^{nt}$

Substituting the given values we get

$A = 2880 (1 + \frac{0.06}{12} )^{12*3} \\A = 3446.34$

Value of her fund after 3 years of saving is $3446.34$