You want to purchase a motorcycle 4 years from now, and you plan to save $3,500 per year, beginning immediately. you will make 4 deposits in an account that pays 5.7% interest. under these assumptions, how much will you have 4 years from today?
a.$16,112
b.$16,918
c.$17,763
d.$18,652
e.$19,584

The answer is option a). $16,111.99

Explanation:

To calculate the total amount amount you will have after 4 years, we need to sum the total amount after the end of each year for four years.

a). Total amount at the end of the first year

Total amount=Deposit+Interest

where;

Deposit=$3,500

Interest=Deposit×interest rate×number of years=3,500×(5.7/100)×1=199.5

replacing;

Total amount after the end of the first year=(3,500+199.50)=$3,699.50

b). Total amount at the end of the second year

Deposit for the second year=Total amount after end of first year+3,500

Deposit for the second year=(3,699.50+3,500)=7,199.50

Total amount at the end of the second year=Deposit+Interest

Total amount at the end of the second year=7,199.50+(7,199.50×5.7/100×1)=7,609.8715

Total amount after the end second year=$7,609.8715

c). Total amount at end of the third year

Deposit for the third year=Total amount after end of second year+3,500

Deposit for the third year=(7,609.8715+3,500)=11,109.8715

Total amount at the end of the third year=Deposit+Interest

Total amount at the end of the third year=11,109.8715+(11,109.8715×5.7/100×1)=11,743.134

Total amount for the end of the third year=$11,743.134

d). Total amount at end of fourth year

Deposit for the fourth year=Total amount at the end of the second year+3,500

Deposit for the fourth year=(11,743.134+3,500)=15,243.134

Total amount at the end of the fourth year=Deposit+Interest

Total amount at the end of the third year=15,243.134+(15,243.134×5.7/100×1)=16,111.99

Total amount for the end of the fourth year=$16,111.99

4 years from now, you will have $16,111.99