Question

You want to buy your dream car which will cost you $5700. If you could invest your entire savings of $4000 at an annual interest of10%, how long (in years rounded to two decimal places) would you have to wait until you have accumulated enough money to buy the car

Answer 1

It will take 3 years and 263 days to collect $5,700

Step-by-step explanation:

Giving the following information:

The car cost $5700. You could invest your entire savings of $4000 at an annual interest of 10%.

Based on the Future Value formula we can calculate the required number of years to achieve the objective:

FV= PV*(1+i)^n

Isolating n:

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

n= [ln(5,700/4,000)/ln(1+0.10)]

n= 3.72

0.72*365= 263 days

It will take 3 years and 263 days to collect $5,700