A man wishes to keep his money in a savings deposit at 25% compound interest so that after three years he can buy a car for N150,000. How much does he need to deposit?
A
N112,000.50
B
N96,000.00
C
N85,714.28
D
N76,800.00
Verified Correct Answer: D.
Step-by-Step Mathematical Solution
Amount A = P(1+r)n;
A = N150,000, r = 25%, n = 3.
150,000 = P(1+0.25)3 = P(1.25)3
P = 150,000/1.253 =N76,800.00
Source: Myschool Past Questions Archive (Record #564)