You want to purchase a new car in 4 years and expect the car to cost $55,000. Your bank offers a plan with a guaranteed APR of 6.5% if you make regular monthly deposits. How much should you deposit each month to end up with $55,000 in 4 years?

You want to purchase a new car in 4 years and expect the car to cost $55,000. Your bank offers a plan with a guaranteed APR of 6.5% if you make regular monthly deposits. How much should you deposit each month to end up with $55,000 in 4 years?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3PB: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

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You want to purchase a new car in 4 years and expect the car to cost $55,000. Your bank offers a plan with a quaranteed APR of 6.5% if you make regular monthly deposits. How much should you deposit each
month to end up with $55,000 in 4 years?
You should invest $ each month.
(Round the final answer to the nearest cent as needed. Round all intermediate values to seven decimal places as needed.)

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