Question

your trying to save to buy a new $220,000 Ferrari. you have $46,00 today

You're trying to save to buy a new $220,000 Ferrari. You have $46,000 today that can be invested at your bank. The bank pays 6.0 percent annual interest on its accounts. How long will it be before you have enough to buy the car? Multiple Choice 26.61 years 24.86 years 27.11 years

Answer 1

Here we will use the following formula:

FV = PV * (1 + r%)n

where, FV = Future value = $220000, PV = Present value = $46000, r = rate of interest = 6%, n= time period

now, putting theses values in the above equation, we get,

$220000 = $46000 * (1 + 6%)n

$220000 / $46000 = (1 + 0.06)n

4.78260869565 = (1.06)n

(1.06)26.85 = (1.06)n

n = 26.85

So, it will take 26.85 years