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A man wishes to keep his money in a savings deposit at 25% compound interest so ...


Question

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 ₦150,000. How much does he need to deposit?

Options

A) ₦112,000.50

B) ₦96,000.00

C) ₦85,714.28

D) ₦76,800.00

The correct answer is D.

Explanation:

Amount A = P(1+r)n;
A = ₦150,000, r = 25%, n = 3.
150,000 = P(1+0.25)3 = P(1.25)3
P = 150,000/1.253 =₦76,800.00

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