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16 July, 11:52

You have 24 months left until you graduate and you plan on buying yourself a new $20,000 car on graduation day. If you invest $300 a month for the next 24 months earning 4% a month - will you have enough money? A) NoB) Yes

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  1. 16 July, 15:34
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    Answer: No, the money won't be enough to buy the car

    Step-by-step explanation:

    you plan on buying yourself a new $20,000 car on graduation day and graduation day is 24 months time. If you invest $300 a month for the next 24 months.

    The principal amount, p = 300

    He is earning 4% a month, it means that it was compounded once in four months. This also means that it was compounded quarterly. So

    n = 4

    The rate at which the principal was compounded is 4%. So

    r = 4/100 = 0.04

    It was compounded for a total of 24 months. This is equivalent to 2 years. So

    n = 2

    The formula for compound interest is

    A = P (1+r/n) ^nt

    A = total amount that would be compounded at the end of n years.

    A = 300 (1 + (0.04/4) / 4) ^4*2

    A = 300 (1 + 0.01) ^8

    A = 300 (1.01) ^8

    A = $324.857

    The total amount at the end of 24 months is below the cost of the car which is $20000. So he won't have enough money to buy the car
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