Question

You're trying to save to buy a new $180,000 Ferrari. You have $32,000 today that can be invested at your bank. The bank pays 5.0 percent annual interest on its accounts. How long will it be before you have enough to buy the car

Answer 1

Given an annual interest rate of 5%, it will take 35.4 years to accumulate $180,000.

Step-by-step explanation:

Giving the following information:

Future Value (FV)= $180,000

Present value (PV)= $32,000

Interest rate (i)= 5%

To calculate the number of years (n) to reach the objective, we need to use the following formula:

n= ln(FV/PV) / ln(1+i)

n= ln(180,000/32,000) / ln(1.05)

n= 35.4

Given an annual interest rate of 5%, it will take 35.4 years to accumulate $180,000.