The Pirerras are planning to go to Europe 3 years from now and have agreed to set aside $150/month for their trip. If they deposit this money at the end of each month into a savings account paying interest at the rate of 5%/year compounded monthly, how much money will be in their travel fund at the end of the third year? (Round your answer to the nearest cent.)

To find out how much money will be in the Pirerras' travel fund at the end of 3 years, we can use the future value of an ordinary annuity formula:

\[
S = R \times \frac{(1 + \frac{r}{100m})^{mt} - 1}{\frac{r}{100m}}
\]

Where:
- $ S $ is the future value (total amount accumulated),
- $ R $ is the periodic payment (amount deposited each period),
- $ r $ is the annual interest rate (as a percentage),
- $ t $ is the number of years,
- $ m $ is the number of compounding periods per year.

Given:
- $ R = 150 $ (monthly deposit)
- $ r = 5\% $ (annual interest rate)
- $ t = 3 $ years
- $ m = 12 $ (compounded monthly)

We'll plug in the values to find $ S $.At the end of 3 years, the Pirerras will have **$5,813.00** in their travel fund if they deposit $150 at the end of each month into a savings account paying 5% interest per year, compounded monthly.

Would you like more details or have any questions?

Here are five related questions to consider:
1. How much interest will the Pirerras earn over the 3 years?
2. What if the monthly deposit was increased to $200?
3. How would the total amount change if the interest rate was 6% instead of 5%?
4. What is the future value if the compounding frequency was quarterly instead of monthly?
5. How much would they need to deposit monthly to reach $6,000 in 3 years?

**Tip:** Starting to save early and taking advantage of compound interest can significantly increase your savings over time.

Learn how to calculate the future value of savings using compound interest. This problem involves determining the total amount accumulated over 3 years by depositing $150 monthly into a savings account with a 5% annual interest rate, compounded monthly. Suitable for financial planning and investment enthusiasts.

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