When Anthony was born, his mom put aside $1000 in a savings account that earns 1% interest compounded monthly. When Anthony is 18, will he have enough money to purchase a $15,000 car? If not, how much should she have deposited to be sure he has $15,000?

The applicable formula is;

A = P (1+r) ^nt

Where

A = Accumulate amount

P = Initial invested amount

r = Annual interest rate

n = Number of payments in a year

t = Time in years

First part of the question: Accumulated amount after 18 years

Substituting;

A = 1000 (1+0.01) ^12*18 = $8,578.61

Since the car costs $15,000 and the amount in the bank after 18 years is $8,578.61, Anthony wouldn't be able to afford the car.

Second part of the question: The amount which should have been deposited for Antony to afford the car after 18 years

15,000 = P (1+0.01) ^12*18

15,000 = P*8.5786

P = 15,000/8.5786 = $1,748.54

Therefore, for Antony to afford the $15,000 after 18 years, the mum should have deposited $1,748.54.