Problem 4: You know that in four years the car will cost you $24310.13 and in sixyears it will cost you $26801.91 . If you can earn 3% per year, how much would youhave to invest today to purchase the car in (a) four years? (b) six years?

An amount invested gets increases in multiples of the interest rate applicable. It implies that…

Answered: years it will cost you $26801.91 . If…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 16PROB

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Similar questions

Calculating interest earned and future value of savings account. If you put 6,000 in a savings account that pays interest at the rate of 3 percent, compounded annually, how much will you have in five years? (Hint: Use the future value formula.) How much interest will you earn during the five years? If you put 6,000 each year into a savings account that pays interest at the rate of 4 percent a year, how much would you have after five years?
3. You would like to have $42000 in five years to make some improvements on your house. What is the amount you need to invest today at 6% compounded monthly to reach your goal? How much of the $42000 is interest? SOLVE ON EXCEL
4. Suppose you want to buy a car that costs $27000 with a loan at 3.875% APR and you want your payment to be below $290. How many years do you need to finance the car? ______ years show work.
4. You want to save the down payment required to purchase a vacation home at the end of five years. If the required down payment is $25,000 and you can earn 5% a year on your savings account, how much do you need to set aside at the end of each year for the next four years?
You are saving for a new car. You place $14,200 into an investment account today. How much will you have after four years if the account earns (a) 4%, (b) 6%, or (c) 8% compounded annually? Note: Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places. (FV of $1, PV of $1, FVA of $1, and PVA of $1)
11. Assume that your hotel decided to purchase a new limo which is selling for $85,000 today. Your hotel will make a monthly payment for the next 5 years, with an annual interest rate of 3%. What will be the amount of your hotel's monthly car loan payment ($)?

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years it will cost you $26801.91 . If you can earn 3% per year, how much would you have to invest today to purchase the car in (a) four years? (b) six years?