You are planning to buy a new car/truck (of your dreams) 7 years’ time at a cost of $134,956. How much will you need to save each month to be able to buy the car with cash assuming an annual interest rate of 10%?

You are planning to buy a new car/truck (of your dreams) 7 years’ time at a cost of $134,956. How much will you need to save each month to be able to buy the car with cash assuming an annual interest rate of 10%?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5MC: If you are saving the same amount each month in order to buy a new sports car when the new models...

See similar textbooks

Related questions

Q: Suppose you have selected a new car to purchase for $19,500. If the car can be financed over a…

A: Interest Payment: It refers to the financial or monetary charge levied on the borrowed amount.

Q: You are saving for a Porsche Carrera Cabriolet, which currently sells for nearly half a million…

A: Time value of money :— It means that value of money in present days has more as compared from same…

Q: You are deciding to buy a car to commute to work given the comparatively low interest of 6% per…

A: A loan is a debt arrangement that provides financial assistance to a person to full fill a specific…

Q: you are saving money to buy a car. if you save $290 per month starting one month from now at an…

A: An Annuity is a continuous flow of systematic timely cash flows made or received for a stipulated…

Q: You want to buy a house within 3 years, and you are currently saving for the down payment. You plan…

A: Future value of growing annuity The future value of a growing annuity is the value of money received…

Q: compounded

A: Formula to calculate the present value or amount to be deposited today is: PV = FV/(1+r)^n Where PV…

Q: You are saving money to buy a car. If you save $330 per month starting one month from now at an…

A: Calculation of Future value:The value after 4 years is $18,981.83.Excel spreadsheet:

Q: You are saving money to buy a car. If you save $310 per quarter starting three months from now at an…

A: An annuity is a series of a fixed amount of cash flows occurring at equal time periods for a…

Q: You can afford payments of $950 per month for the purchase of a house. a) What is the largest…

A: Given details, Monthly payments, C = $950Interest rate, r = 3.2% p.a. or 0.267% per month (3.2%…

Q: You need $30000 in cash to buy a car 15 years from today. You expect to earn 14 percent, compounded…

A: Future value is important to both investors and financial planners because it helps them to predict…

Q: You are saving for a Porsche Carrera Cabriolet, which currently sells for nearly half a million…

A: Present value is the current value of a future amount that is to be received or paid out. Future…

Q: You plan to buy a new car. The price is $30,000 and you will make a down payment of $4,000. Your…

A: An Annuity is a continuous flow of systematic timely cash flows made or received for a stipulated…

Q: You want to buy a new car and have saved a down payment of $2000. The car that you want costs…

A: To solve the question, we first need to determine the amount for which the monthly payments has to…

Q: As part of your financial planning, you wish to purchase a new car exactly 5 years from today. The…

A: Present value of the car = $20,000 When the inflation rate is 2% Future value of the car = Present…

Q: You want to buy a house within 3 years, and you are currentlysaving for the down payment. You plan…

A: The future value is the amount that will be received at the end of a certain period. In simple…

Q: Suppose you want to save in order to purchase a new car. Take the APR to be 3.6%. If you deposit…

A: Future value of annuity The future value of annuity refers to the total value of the investment at…

Q: Dave wants to buy a $25,000 car by making a 10% down payment and financing the rest for five years.…

A: Down payment is defined as an initial partial payment at the time of purchasing an expensive items…

Q: Today, your dream car costs $50,100. You feel that the price of the car will increase at an annual…

A: We need to find future value of the car if grown at 2.1%

Q: The Hunters are trying to save $8000 as the down payment on a new recreational vehicle. If they can…

A: Given: Future value = $8,000 Monthly deposit = $200 Interest rate = 4%

Q: You want to have $35,000 in cash to buy a car 3 years from today. You expect to earn 3.6 percent,…

A: In this we have to calculate present value of future value.

Q: You need $2,000 to buy a new stereo for your car. If you have $500 to invest at 14% compounded…

A: In this question we need to compute the number of years i.e. time period. This question is based on…

Q: You want to save the down payment required to purchase a vacation home at the end of four years. If…

A: FUTURE VALUE OF ANNUITY (FVA) FORMULA: FVA=A×1+rn-1r where, r=rate of interest n = number of years…

Q: You want to purchase a new car in 3 years and expect the car to cost $15,000. Your bank offers a…

A: Future value of a present value is the value of that amount after taking into account the time value…

Q: It is estimated that the maintenance cost on a new car will be $350 the first year. Each subsequent…

A: Amount need to set aside to pay all future maintenance cost is the present value of future cash…

Q: What rate will meet his desire to buy the car?

A: Information Provided: Term = 10 years Monthly Deposit = 6000 Future value = 756,000

Q: Say, you want to buy your dream car, costing $40k, in 5 years. You are saving up for that by making…

A: Car cost = Future Value Required = 40,000 Time Period = 60 months Monthly Deposit = ? First Month…

Q: You want to buy a $15,000.00 car. You can make a 10% down payment, and will finance the balance with…

A: The Equal Montly installment is calculated with the help of following formula EMI = P × r(1 + r)n…

Q: Kristi Perez puts $10,500 into an account to save money to buy a car in 12 years. She expects the…

A: We require to calculate the interest rate from following details given in the question: Current…

Q: Assume that you are going to buy a new car worth $28,000. You will be able to make a down payment of…

A: Annual rate of return for dealer is the nominal annual interest rate that is charged by the dealer…

Q: You want to purchase a new condominium that costs $285,000. Your plan is to pay 30 percent down in…

A: A written agreement through which a lender gets the right to take the property that is put as a…

Q: You want to buy a new sports car 3 years from now and you want to save $4,200 per year, beginning…

A: Using excel FV function

Q: Unfortunately it costs $25,000, it you want to the purchases the car in five years and in the…

A: A concept that implies the future worth of the money is lower than its current value due to several…

Q: You want to buy a $13,000.00 car. You can make a 10% down payment, and will finance the balance with…

A: The Equal Montly installment is calculated with the help of following formula EMI = P × r(1 + r)n…

Q: Someone offers to buy your car for four, equal annual payments, beginning 2 years from today. If you…

A: We use PMT function to calculate annual payments

Q: You want to buy a car, and a local bank will lend you $20,000. The loan would be fully amortized…

A: A loan is a method through which an individual can borrow money from a financial institution for…

Q: You want to invest $27,000 today to accumulate $30,390 to buy a car. If you can invest at an…

Q: will it cost at that time.

A: This problem involves the calculation of future value which is given by the following formula: FV =…

Q: You want to buy a new sports car 3 years from now, and you plan to save $6,700 per year, beginning…

A: A study that proves that the future worth of the money is lower than its current value due to…

Q: Hudson would like to purchase a new car for $12,000. How much will his monthly payments be if he…

A: Loan amount (PV) = $ 12000 Interest rate = 6.5% Monthly interest rate (r) = 6.5%/12 =…

Q: what price of car can you afford?

A: An Annuity is a series of payments of fixed amounts and at fixed intervals. These can be of two…

Q: 1. Determine how much you will have saved after 9 years. 2. Determine the amount saved if you were…

A: Time value of money: Time value of money is a vital concept to the investors, as it suggests them…

Q: *You are planning to purchase your first electric car worth $65,000 right after your graduation (in…

A: A Continuous Compounded Interest rate is the interest rate that is calculated on the principal…

Q: You buy a car for $34,000. You pay $10,000 down and finance the rest at 3% monthly over five years.…

A: Value of Car is $34,000 Down Payment is $10,000 Loan Amount (PV) is: Interest Rate (Rate) is 3%…

Q: Al Derover wants to buy a used jeep in five years. He estimates the cost will be $13,000. If he…

A: Here in this question we are required to calculate the Futures value of…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Calculation of monthly rate and number of months

VIEW

Calculation of amount that need to be saved each month

VIEW

Step by step

Solved in 2 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

If you are saving the same amount each month in order to buy a new sports car when the new models are released, which of the following will help you determine the savings needed? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
You want to buy a new sports car 3 years from now, and you plan to save $6,700 per year, beginning one year from today. You will deposit your savings in an account that pays 5.2% interest. How much will you have just after you make the 3rd deposit, 3 years from now?
You want to save money from your businessoperation to replace a truck that has been used indelivery. The truck will be replaced after 12 yearsfrom now and the replacement cost would be about$60,000. If you earn 5% interest on your savings,how much must you deposit at the end of each yearto meet the needs?
You want to buy a new sports car 3 years from now and you want to save $4,200 per year, beginning one year from today. You will deposit your savings in an account that pays 5% annual compounding interest rate. How much will you have at the end of three years?
You plan to buy a new car. The price is $30,000 and you will make a down payment of $4,000. Your annual interest rate is 10% and you intend to pay for the car over five years. What will be your monthly payment?
You want to buy a house in 4 years and expect to need $25,000 for a down payment. If you have $15,000 to invest, how much interest do you have to earn (compounded annually) to reach your goal?
As part of your financial planning, you wish to purchase a new car exactly 5 years from today. The car you wish to purchase costs $20,000 today, and your research indicates that its price will increase by 2% to 4% per year over the next 5 years. Estimate how much you have to put on annual deposits at the end of each 5 following years to fulfill your dreams about new car. You can deposit your money on deposits which give you 6% rate of return per year.
You have already saved $6975 to buy a used car. You invest this money in a certificate of deposit earning 0.85% APR compounded monthly. How many years will it take your account to reach your target of $7375 in order to buy the new car? Your Answer: Answer
You are about to purchase a new car and have two options to pay for it. You can pay $20,000 in cash immediately, or you can get a loan that requires you to pay $500 each month for the next 48 months (four years). If the monthly interest rate you earn on your cash is 0.5%, which option should you take? Why?
You are hoping to buy a new boat 3 years from now, and you plan to save $4,200 per year, beginning one year from today. You will deposit your savings in an account that pays 5.2% interest. How much will you have just after you make the 3rd deposit, 3 years from now?
A student wants to save up for a car, assuming that he/she would be able to save up a certain sum every month or every three months. The car value in 4 years is expected to be 255000 LE, if the bank pays 0.14 interest compounded monthly? How much must the student put aside every month?____________ What will be the equivalent interest rate if the student saves every three months?_____________ How much must the student put aside every three months? _______________ please submit answers with steps quick as possible please
A student wants to save up for a car, assuming that he/she would be able to save up a certain sum every month or every three months. The car value in 4 years is expected to be 255000 LE, if the bank pays 0.14 interest compounded monthly? How much must the student put aside every month?____________ What will be the equivalent interest rate if the student saves every three months?_____________ How much must the student put aside every three months? _______________