Bob wants to buy a new truck in three years. He intends to pay for as...

Question

Question

Bob wants to buy a new truck in three years. He intends to pay for as much of it in cash as he can. He figures that he can sa

Answer 1

Answer #1

Given savings at the initial stage is $25000 and the interest rate is 4%; time = 3 years

Bob's savings are as follows:

1^st year = 25000 * 1.04 = $26000

2^nd year = 26000 * 1.04 = $27040

3^rd year = 27040 * 1.04 = $28121.60

Total amount of cash in Bob's hands at the end of 3 years = (26000 + 27040 + 28121.60) = $81161.60

Hence the answer is (b)

Answer 2

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