Question

You're trying to save to buy a new $200,000 Ferrari. You have $48,000 today that can be invested at your bank. The bank pays 4.5 percent annual interest on its accounts. How long will it be before you have enough to buy the car?

Answer 1

The answer is 32.4 years

Step-by-step explanation:

The person in question is trying to buy $200,000 Ferrari. This is the FUTURE VALUE(FV)

As at today, the person has $48,000 in the bank. This is the PRESENT VALUE.

The prevailing interest rate is 4.5 percent per annum.

So, to find the number of years now:

Lets use financial calculator to solve this.

PV = -48,000;

FV = 200,000

I/Y = 4.5

CPT N = 32.4

Therefore, the number of years needed to buy this car is 32.4 years.