You plan to buy a new car in three years and begin depositing $250 per month into a savings account that earns 4.5% annual interest, compounded monthly. After three years of deposits, how much money is in the account? What would you need to enter in Excel to help you answer this question? O=FV(4.5/12%,3,-250) O=FV((4.5%/12),36,-250) O=FV(4.5%, 3..-250) O=FV(4.5/12,36,,250)
You plan to buy a new car in three years and begin depositing $250 per month into a savings account that earns 4.5% annual interest, compounded monthly. After three years of deposits, how much money is in the account? What would you need to enter in Excel to help you answer this question? O=FV(4.5/12%,3,-250) O=FV((4.5%/12),36,-250) O=FV(4.5%, 3..-250) O=FV(4.5/12,36,,250)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:You plan to buy a new car in three years and begin depositing $250 per month into a savings account that earns 4.5% annual interest, compounded monthly. After three
years of deposits, how much money is in the account? What would you need to enter in Excel to help you answer this question?
O=FV(4.5/12%,3,-250)
O=FV((4.5%/12),36,-250)
O=FV(4.5%,3,,-250)
O=FV(4.5/12,36,,250)
Expert Solution
Step 1: Introduction of the question:
Future Value (FV) is a financial concept that represents the projected worth of a sum of money at a specific point in the future, taking into account a predetermined interest rate or investment return. It is used in various financial calculations, such as compound interest, investment valuation, and retirement planning, to determine how an initial amount will grow over time. The FV formula considers factors like the initial principal amount, interest rate, compounding frequency, and the number of time periods involved.
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