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Suppose James wants to buy a car in 3 years time and estimates that he will need $25,000. The interest rate that he can earn
Suppose James wants to buy a car in 3 years time and estimates that he will need $25,000. The interest rate that he can earn from a savings account is 6% per annum. If James can put in $7,000 today, $6,000 in one years time and $5,000 in 2 years time, how much will he have to come up with at the end of the third year to buy his car?
A. | He does not require more money as the total amount earned from the savings account at the end of 3 years will be enough. | |
B. | $20,378.71. | |
C. | None of the above. Not enough information has been provided. | |
D. | $4,621.29. |
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