Question
In: Finance
You have $10,000 now. You want to purchase a car that costs $14,000. Current available interest...
You have $10,000 now. You want to purchase a car that costs $14,000. Current available interest rate is 5% annually. Considering that the price of the car remains the same, how much time will it take you to be able to purchase the car?
Solutions
Expert Solution
PV = Amount available = $10,000
FV = Amount required to purchase the car = $14,000
r = annual interest rate = 5%
Let n = number of years
FV = PV * (1+r)^n
$14,000 = $10,000 * (1+5%)^n
1.4 = (1.05)^n
n = log(1.4) / log(1.05)
n = 0.146128036 / 0.0211892991
n = 6.89631287 years
Therefore, it will take 6.70 years to purchase the car
jeff jeffy answered 2 years agoRelated Solutions
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