Question

The user wants to save money to buy a new car 10 years from today. Have...

  1. The user wants to save money to buy a new car 10 years from today. Have the user input the amount that they can invest at the start of each year and the price of the car that they want to buy. What annual interest rate will they need to earn in order to be able to buy the car 10 years from today?

Note: This question is from excel for accounting, so the calculation should be made in an excel format.

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Answer #1

$10,000 and $55,000 are taken as an example, any figure can be entered and the Annual interest rate will change accordingly.

1 is added at the end of the formula to signify the type of annuity, as the payment is made at the start of each year, hence it is an annuity due, if payments were made at the end then 0 would have been taken.

Cal:

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