Question

A local car dealership is holding a year-end event because new car models have just been released. Declan has $35,000 to spend on a car. The car Declan decides to buy for his family costs $35,000. However, it is part of the year-end event, which means he receives a 15% discount on the new car. Declan plans to put the money he saves on the car into a new bank account. The bank account has a yearly simple interest rate of 4%, paid at the end of each year. If Declan does not add any other money to this bank account, it will take

Answer 1

6 years

Explanation:

The computation of the time period is given below:

As we know that

Future value = Present value × (1 + rate of interest)^time period

$6,720 = ($35,000 × 15%) × (1 + 0.04)^time period

$6,720 = $5,250 × 1.04^time period

1.28 = 1.04^time period

So, the time period is 6.29 years i.e. 6 years

hence, the time that should be taken is 6 years