Answer :
To get the type of car that Sandy can afford after 3 years, we find the future annuity of the his yearly deposits.
amount deposited by Sandy in a month is $260
amount deposited per year=260*12=$3120
time=3years
rate=7.8%
Fv of annuity= P[(1+r)^n-1]/r
substituting our values we get
Fv=3120[(1+0,078)^3-1]/0.078
=10109.06208
The value of a car he can drive is $10109.06208
amount deposited by Sandy in a month is $260
amount deposited per year=260*12=$3120
time=3years
rate=7.8%
Fv of annuity= P[(1+r)^n-1]/r
substituting our values we get
Fv=3120[(1+0,078)^3-1]/0.078
=10109.06208
The value of a car he can drive is $10109.06208