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This is a typical future value (FV) problem involving annual deposits (savings), with interest compounded annually. The formula for the future value of an annuity (the type of problem Bob is dealing with) is:

\[
FV = P \times \frac{(1 + r)^t - 1}{r}
\]

Where:
- $ FV $ is the future value (in this case, $50,000),
- $ P $ is the annual deposit (what we need to find),
- $ r $ is the annual interest rate (1.2% or 0.012),
- $ t $ is the number of years (7 years).

Let's solve for $ P $, the annual deposit Bob must make. I will calculate it.Bob must deposit approximately **$6,889.80** each year to reach his goal of $50,000 in 7 years, given a 1.2% interest rate compounded annually.

Would you like more details on the calculation or have any questions?

Here are 5 related questions:
1. How would the required deposit change if the interest rate increased to 2%?
2. What happens to Bob's final savings if he deposits more than the calculated amount annually?
3. How would the answer change if Bob wanted to achieve his goal in 5 years instead of 7?
4. What is the total amount of interest Bob earns over 7 years with this plan?
5. How does the frequency of compounding affect the total amount Bob needs to deposit?

**Tip:** Small increases in the interest rate can significantly reduce the amount of annual savings required over time.

Bob wants $50,000 at the end of 7 years in order to buy a car. If his bank pays 1.2% interest, compounded annually, how much must he deposit each year in order to reach his goal?

Learn how to calculate the annual deposit Bob must make to reach his goal of $50,000 in 7 years, given a 1.2% interest rate compounded annually. This problem explores compound interest and the future value of annuities, with step-by-step calculations. Suitable for Grades 9-12.

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