is my part (c) correct? Question 2Steven has struck a deal with his dad to buy his car when he can afford to.The car is valued at $55 000 today but depreciates at a continuously compounding rate of1% per month (i.e. 1 — d = e−0.01).Steven has $9 000 in a bank account and plans to add $120 each month end. The bankpays interest at a continuously compounding rate of 1% per month (i.e. 1 + r = e0.0¹).(a) Formulate the value of the car as a finite difference equation and solve by calculatingthe Complementary Function and Particular Solution.(b) Formulate Steven's Savings amount in a similar way and solve.(c) Solve to equate the values in (a) and (b) to find the time when Steven can buy thecar. (c) Solving to equate the values in (a) and (b) to find the time when Steven can buy the carWe can equate the values in (a) and (b) to find the time when Steven can buy the car. Thisgives the following equation:55,000e - 0.01t – 0.01 Vt = 9,000e × 0.01t + 120(1 +0.01) × t + 0.01StWe can solve this equation for t to find the time when Steven can buy the car. The solutionis approximately t=100 months.

Current value of Car = 55000 Depreciation per month = 1% Steven's bank current balance =…

Steven has struck a deal with his dad to buy his car when he can afford to. The car is valued at $55 000 today but depreciates at a continuously compounding rate of 1% per month (i.e. 1 - d = e-0.01). Steven has $9 000 in a bank account and plans to add $120 each month end. The bank pays interest at a continuously compounding rate of 1% per month (i.e. 1 + r = e0.01 ). (a) Formulate the value of the car as a finite difference equation and solve by calculating

Steven has struck a deal with his dad to buy his car when he can afford to. The car is valued at $55 000 today but depreciates at a continuously compounding rate of 1% per month (i.e. 1 - d = e-0.01). Steven has $9 000 in a bank account and plans to add $120 each month end. The bank pays interest at a continuously compounding rate of 1% per month (i.e. 1 + r = e0.01 ). (a) Formulate the value of the car as a finite difference equation and solve by calculating

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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