You recently got promoted at your job. You have since decided to buy your dream car...

You recently got promoted at your job. You have since decided to buy your dream car and expect that it will cost you $93,000 seven years from today. After budgeting your expenses, you decide that you can save $9,000 per year at the end of each year. Given a market interest rate of 13%, will you be able to purchase your car at the end of year 7? Would you be able to afford it one year later?

with financial calculator

Solutions

Expert Solution

Calculating Future Value at the end of year 7,

Using TVM Calculation,

FV = [PV = 0, PMT = 9,000, N = 7, I = 0.13]

FV = $93,641.92

One can afford it at the end of year 7

So, one can also afford it stcthe end of year

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

You recently got promoted at your job. You have since decided tobuy your dream car...

You recently got promoted at your job. You have since decided to buy your dream car and expect that it will cost you $94,000 six years from today. After budgeting your expenses, you find you can start with $2000 today and decide that you can save $12,000 per year at the beginning of each year. Given a market interest rate of 6%, will you be able to purchase your car at the end of year 6? Would you be able...

You have decided to buy a car that costs $23,000. Since you do not have a...

You have decided to buy a car that costs $23,000. Since you do not have a big down payment, the lender offers you a loan with an APR of 5.87 percent compounded monthly for 5 years with the first monthly payment due today. What is the amount of your loan payment?

You have decided to buy a car that costs 27400. Since you do not have a...

You have decided to buy a car that costs 27400. Since you do not have a big down payment, the lender offers you a loan with an APR of 6.09 percent compounded monthly for 7 years with the first monthly payment due today. What is the amount of your loan payment

You have decided to buy a car that costs $24,600. Since you do not have a...

You have decided to buy a car that costs $24,600. Since you do not have a big down payment, the lender offers you a loan with an APR of 5.95 percent compounded monthly for 6 years with the first monthly payment due today. What is the amount of your loan payment?

Imagine that you have decided to acquire your dream car. You now have to decide whether to...

Imagine that you have decided to acquire your dream car. You now have to decide whether to buy or lease that car. Write a report specifying the differences between leasing and buying your dream car and make a decision on whether to buy or lease. In writing your report you must do the following: Gather the terms under which you would lease the car, such as the necessary down payment amount and monthly payment amount. Calculate the total costs when leasing...

You have decided to buy a car, the price of the car is $18,000. The car...

You have decided to buy a car, the price of the car is $18,000. The car dealer presents you with two choices: (A) Purchase the car for cash and receive $2000 instant cash rebate – your out of pocket expense is $16,000 today. (B) Purchase the car for $18,000 with zero percent interest 36-month loan with monthly payments. Market interest rate is 4%. Which option above is cheaper? How much do you save?

You want to buy your dream car which will cost you $5400. If you could invest...

You want to buy your dream car which will cost you $5400. If you could invest your entire savings of $3000 at an annual interest of11%, how long (in years rounded to two decimal places) would you have to wait until you have accumulated enough money to buy the car?

Assume you have been working at your first job since college.. You now wish to buy...

Assume you have been working at your first job since college.. You now wish to buy a house for $450,000. You plan to make a 35 percent down payment while financing the rest. Assuming your neighborhood bank offers you a 30-year mortgage with a 4.50% interest rate, what will your monthly payments be? How would your monthly payments change if you increased your down payment to 50 percent?

Say you buy your dream car for 223,695. Determine the monthly payment, the total payment, and...

Say you buy your dream car for 223,695. Determine the monthly payment, the total payment, and the amount of interest you would pay for each of the following payment options (show all formaulas used): A. 2% interest rate for 36 months B. 3% interest rate for 48 months C. 4% interest rate for 60 months D. 5% interest rate for 72 months

You just got your first job and are buying a new car. After making a sizeable...

You just got your first job and are buying a new car. After making a sizeable down payment, you are borrowing the remaining $12,000 from your credit union at a loan rate of 6% APR over a five-year period. What are your monthly car loan payments?

Subjects