Question

You're trying to save to buy a new $150,000 Ferrari. You have $35,000 today that can be

invested at your bank. The bank pays 4.0 percent annual interest on its accounts. How
long will it be before you have enough to buy the car?
Multiple Choice
O
37.61 years
36.86 years

Answer 1

37.61 yrs

Explanation:

FV = future value = 150 000

PV = present value = 35 000

i = decimal interest = .04

annual interest periods = n

formula FV = PV ( 1 + i)^n plug in the values and solve for 'n'

150 000 = 35000 ( 1 + .04)^n

150000/35000 = (1 + .04)^n take log of both sides

.632 = n log1.04

n = years = 37.105 years

Answer 2

37.61 years

Explanation:

I am assuming this is compound interest

35 multiplied by 1.04 to the power of 36.86 does not generate enough money.

35 multiplied by 1.04 to the power of 37.61 does.