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JKCPA, CPA
Category: Finance
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Experience:  Bachelors degree and CPA with Accounting experience.
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# Gary Whitmore is a high school sophomore. He currently has

### Resolved Question:

Gary Whitmore is a high school sophomore. He currently has \$7,500 in a money market account paying 5.65 percent annually. He plans to use this and his savings over the next four years to buy a car at the end of his sophomore year in college. He estimates that the car will cost him \$12,000 in four years. How much should he invest in the money market account every year for the next four years if he wants to achieve his target?
Submitted: 6 years ago.
Category: Finance
Expert:  JKCPA replied 6 years ago.
Hi,

Thanks for your question.

Please click here for the answer.

Hope this helps!
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Customer: replied 6 years ago.
What was the formula you used?
Expert:  JKCPA replied 6 years ago.
Hi,

Thanks for the accept.

The Excel formula is:
=PMT(RATE,NPER,PV,-FV)

where nper = number of periods (4)
rate = interest rate = 5.65%
PV = present value = \$7500
FV = future value = \$12000
PMT = what we're solving for (amount to be deposited each year)

Let me know if you meant that you need the mathematical formula to figure this out by hand (without Excel).

Customer: replied 6 years ago.
I'd like the marhmarical formula. Thanks
Expert:  JKCPA replied 6 years ago.

The math formula is: