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Masja [62]
3 years ago
14

You want to buy your dream car which will cost you $5900. If you could invest your entire savings of $3500 at an annual interest

of12%, how long (in years rounded to two decimal places) would you have to wait until you have accumulated enough money to buy the car?
Business
1 answer:
Liula [17]3 years ago
7 0

Answer:

t = 4.607742347 years rounded off to 4.61 years

Explanation:

To calculate the number of years it will take an investment of $3500 to grow to $5900 at an annual interest rate of 12%, we will use the formula for the future value of cash flows. The formula can be written as follows,

Future value = Present value * (1+i)^t

Where,

  • i is the interest rate
  • t is the time in years

Plugging in the values for future value, present value and i, we can calculate the t to be,

5900 = 3500 * (1+0.12)^t

5900 / 3500 = (1.12)^t

1.685714286 = 1.12^t

Taking log on both sides.

Ln(1.685714286)  /  Ln(1.12)  =  t

t = 4.607742347 years rounded off to 4.61 years

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Answer:

The future value of annual savings is $1,370.30

Explanation:

The amount of annual savings =(Shaan's premium +Anita's premium)*10%

Shann's premium is $790

Anita's premium  is $645

Annual savings =($790+$645)*10%

                          =$143.5

The future value formula is given below:

=-fv(rate,nper,pmt,-pv)

rate is 5% annual interest rate

nper is the 8 years that is the duration of investment

pmt is the annual savings of $143.5

pv is the total amount invested now which is zero

=-fv(5%,8,143.5,0)

fv=$ 1,370.30

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Exercise 10-2 Straight-Line: Amortization of bond discount LO P2 Tano issues bonds with a par value of $180,000 on January 1, 20
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Answer:

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A 3-year annual coupon bond has coupons of $12 per year starting one year from now and matures in 3 years for the amount $100. T
Ganezh [65]

Answer: Macaulay Duration = 2.6908154485 = 2.69

Explanation:

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