Question

You're trying to save to buy a new $201,000 Ferrari. You have $51,000 today that can be invested at your bank. The bank pays 5.9 percent annual interest on its accounts. How long will it be before you have enough to buy the car

Answer 1

The answer is 23.92 years

Step-by-step explanation:

Future value(FV) = $201,000

Present value(PV) = $51,000

Annual rate of interest(i)= 5.9%

Using a texas BA II plus calculator:

FV = 201,000

PV= -51,000

I/Y = 5.9

CPT N = 23.92 years

OR

FV = PV × (1 + i)^N

$201,000 = $51,000 × (1 + 0.05.9)^N

3.9 = (1 + 0.05.9)^N

Solving this, the number of years is 23.92 years