The price of a car you want is $39,000 today. Its price is expected to increase by $1000 each year. You now have $25,000 in an investment account, which is earning 11.00% per year. How many years will it be before you have enough to buy the car without borrowing any money? (Round the final answer to three decimal places.) The time taken is determined to be 13 years.

The price of a car you want is $39,000 today. Its price is expected to increase by $1000 each year. You now have $25,000 in an investment account, which is earning 11.00% per year. How many years will it be before you have enough to buy the car without borrowing any money? (Round the final answer to three decimal places.) The time taken is determined to be 13 years.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

You’d like to buy a small ranch when you retire in 38 years. You estimate that in 38 years you’ll need $9 million to do so. If your savings can earn 1.0% per month, how much will you need to save each month (for 38 years), starting next month, in order to reach your goal? Round to the nearest cent. [Hint: We are trying to solve for the cash flows of an annuity. The formula we need to use is dictated by whether we are given the PV or the FV of that annuity. Also, we are given the monthly interest rate, which is i/m in our formulas.]
You're trying to save to buy a new $68,000 sports car. Currently, you have saved $36840 which is invested at 4.9 percent annual interest. How many years will it be before you purchase the car assuming the price of the car remains constant?
It’s time to get a new laptop. The laptop is $1,800. You could put money aside for it each month for one year. If you put the money in an account that earns 4.5%, how much will you have to save each month?Your other option is to finance it over two years paying 7.1%. How much would your monthly payment be?What are the total acquisition costs of each option?
You plan to graduate in 4 years, and then travel to Italy for 3 weeks. The trip will cost $1,500. If you can earn an annual interest rate of 8%, how much do you have to save right now to have enough money for your trip? Instead, the interest rate is 0.667% per month. How much do you need to save right now?
Suppose you have opened an MRI clinic and you are able to purchase a new MRI machine for $1 million. You plan to see 2000 patients per year, and you have determined that your MRI machine at that rate of use should last 10 years. Given a 5% rate of interest, use an annuity calculation to estimate the annual cost of an MRI per patient. Suppose that you could use the machine for 3 years and then sell it for $500,000. What would your annual cost per patient be in that case? Suppose you know that inflation is going to be 10% per year and that you will use the machine for 3 years and then be able to sell it for $800,000 (note that the $800,000 is measured in units of dollars 3 years from now). What then is your annual cost per patient and is your answer in dollars today or dollars three years from now?
You will have $100,000 exactly 7 years from now. You began with an investment of $50,000 at Time Zero. What rate of interest did you earn?
It is estimated that a specific piece of equipment can save $20,000 per year (as the money goes into your pocket) in maintenance. This equipment has an expected life of five years and no market value (meaning you cannot sell it for extra income) at the end of the fifth year. If the interest rate for this purchase is 8% per year, how much could be justified (money out of your pocket) now to purchase this piece of equipment? Please draw the cash flow diagram and use Excel macro to find the answer. Write down the known values in the blank area below.
You have decided to buy a car this year at a price of $18,000. You're planning to take out a loan for the full price of the vehicle at an interest rate of .5% per month. For the first two years (24 months), you decide to repay $600 per month. How much will you have to pay each month for the remainder of the three-year loan (12 months remain) to exactly pay off the car in full at the end of the three-year term? Hint: Consider the monthly interest rate, the number of periods in months, and the monthly cash flows. $433 $500 $443 $600 O $419
Today, your dream car costs $67,700. You feel that the price of the car will increase at an annual rate of 2.6 percent. If you plan to wait 6 years to buy the car, how much will it cost at that time.
You want to purchase a car 4 years from now, and you plan to save $4,500 per year, beginning immediately. You will make 4 deposits in an account that pays 6.3% interest. Under these assumptions, how much will you have 4 years from today? (please round your answer to two decimal points)
You are planning to purchase your first electric car worth $65,000 right after your graduation (in 4 years). Compute the nominal annual interest rate required for a $35,000 investment to grow to $65,000 in 4 years if interest is compounded continuously.
I want to buy a Tesla Model S. in 10 years. The only problem is that it will cost $90,000! how much would I have to deposit each month into a savings plan offering 5.6% APR in order to have enough saved to buy the car in 10 years? What percent of the total amount saved will come from interest if I go with the monthly savings plan?

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