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22 July, 03:48

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

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  1. 22 July, 06:54
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    It will take 3 years and 263 days to collect $5,700

    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
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