Question

You’re trying to save to buy a new $175,000 Ferrari. You have $35,000 today that can be invested at your bank. The bank pays 2.9 percent annual interest on its accounts. How long will it be before you have enough to buy the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

56.3 years

Step-by-step explanation:

Price of the Car, $175,000 is the future target value which I am trying to have by investing $35,000 at a rate of 2.9% per year.

We can calculate the numbers of years by using the Future value formula

FV = PV = ( 1 + r )^n

FV = Future Value = $175,000

PV = Present Value = $35,000

r = rate of interest = 2.9%

n = numbers of year / periods = ?

By Placing the values in the formula

$175,000 = $35,000 x ( 1 + 2.9% )^n

$175,000 / $35,000 = ( 1 + 0.029 )^n

5 = 1.029^n

Log 5 = n Log 1.029

n = Log 5 / log 1 .029 = 56.30 years

Answer 2

Approximately 56 years and 3 months.

Step-by-step explanation:

The formula to calculate this is the same formula we use for calculating the Future Value.

Future Value = Present Value ( 1 + i ) ^ n

175000 = 35000 ( 1 + 0.029 ) ^ n

Calculating for 'n',

We get the ' n ' as 56.29 years.

Hope this Helps.

Goodluck buddy.