John wants to have a $10 000 down payment for his car in three years.If he puts away $7,000 today and gets a 12.6% annual return,he will have the money he needs.

Question

Quizplus · Accepted Answer

Using the formula for future value of a single sum:
FV = PV x (1 + r)^n
where PV is the present value, r is the interest rate, and n is the number of periods.

PV = $7,000
r = 12.6% = 0.126
n = 3 years

FV = $7,000 x (1 + 0.126)^3
FV = $10,060.93

Therefore, John will have more than the $10,000 he needs, making the statement true.

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