Question

You're trying to save to buy a new $160,000 Tesla. You have $78,000 today that can be invested at your bank. The bank pays 6 percent annual interest on its accounts. How many years will it be before you have enough to buy the car? Assume the price of the car remains constant.

Answer 1

t = 12.33 years

Step-by-step explanation:

Given that,

Future value(FV) = $160,000

Present value (PV) = $78,000

Interest rate paid by bank (r) = 6%

No. of years, t = ?

`FV=PV(1+r)^(t)`

`160,000=78,000(1+0.06)^(t)`

`2.05128205=(1+0.06)^(t)`

Taking log both side,

log(2.05128205) = t log(1.06)

0.31202538 = 0.0253058653t

t = 0.31202538 ÷ 0.0253058653

t = 12.33 years