Stephanie wants to save $1000 for a down payment on a car she wants to buy in 3 years. She opens a savings account that pays 5% interest compounded annually. About how much should Stephanie deposit now to have enough money for the down payment in 3 years?
Hi there The formula is A=p (1+r)^t A future value 1000 P present value? R interest rate 0.05 T time 3 years We need to solve for p P=A÷(1+r)^t So P=1,000÷(1+0.05)^(3) P=863.84 round your answer to get P=864
