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Brenda wants to invest $15,000 in an account that pays 4.5%. After 10 years will she be able to afford a $20,000 car?

User Ayana
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Answer:

Brenda will be able to afford the $20,000 car after 10 years.

Explanation:

To determine whether Brenda will be able to afford a $20,000 car after 10 years, we need to calculate the future value of her investment with an interest rate of 4.5%.

The formula for calculating the future value of an investment is:

FV = PV * (1 + r)^n

Where:

FV = Future Value

PV = Present Value (initial investment)

r = Interest rate

n = Number of periods

In this case, Brenda's initial investment (PV) is $15,000, the interest rate (r) is 4.5% (or 0.045 as a decimal), and the number of periods (n) is 10 years.

Let's calculate the future value of Brenda's investment:

FV = $15,000 * (1 + 0.045)^10

FV = $15,000 * (1.045)^10

FV ≈ $22,292.26

After 10 years, Brenda's investment will grow to approximately $22,292.26.

Since the future value of her investment is greater than the cost of the car ($20,000), Brenda will be able to afford the $20,000 car after 10 years.

User Couim
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