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.