Answer:
He needs to deposit N76800 now.
Step-by-step explanation:
The amount of money is compound interest after t years is given by:
[tex]P(t) = P(0)(1+r)^t[/tex]
In which P(0) is the initial amount of money invested and r is the interest rate, as a decimal.
25% compound interest so that after 3 years to buy a car for N150000.
This means that:
[tex]t = 3, P(t) = 150000, r = 0.25[/tex]. So
[tex]P(t) = P(0)(1+r)^t[/tex]
[tex]P(t) = P(0)(1+0.25)^t[/tex]
[tex]P(t) = P(0)(1.25)^t[/tex]
[tex]150000 = P(0)(1.25)^3[/tex]
[tex]P(0) = \frac{150000}{(1.25)^3}[/tex]
[tex]P(0) = 76800[/tex]
He needs to deposit N76800 now.
