Question

You are considering purchasing a new company truck used for deliveries to customers in 3 years. The company has decided to reserve cash today in the lump sum amount of S50,000 for this initiative. If you can earn 10% interest, what is the cost of the truck that you could afford to buy in 3 vears? O a) 65,000 O b S55.000 S66550 C) 0 d.) S150,000

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Answer #1

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=$50000*(1.1)^3

=$50000*1.331

which is equal to

=$66,550.

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