Question

Darlene wants to purchase a car in 5 years at a price of $24,000. If she...

Darlene wants to purchase a car in 5 years at a price of $24,000. If she can earn 8% on her investments, how much does she need to set aside weekly in order to afford the car?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Future Value of an Ordinary Annuity

Future Value = $24,000

Weekly interest rate (r) = 0.153846154% [8.00% / 52 Weeks]

Number of years (n) = 260 Years [5 Years x 52 Weeks]

Weekly deposit amount (P) = ?

Therefore, Future Value of an Ordinary annuity = P x [{(1+ r)n - 1} / r ]

$24,000 = P x [{(1 + 0.00153846154)260 - 1} / 0.00153846154]

$24,000 = P = [(1.491366215 – 1) / 0.00153846154]

$24,000 = P = [0.491366215 / 0.00153846154]

$24,000 = P x 319.38804

P = $24,000 / 319.38804

P = $75.14 per week

Hence, the weekly deposit amount will be $75.14

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
a)Maria wants to buy a car. She has saved $2,500 for a down payment, and she...
a)Maria wants to buy a car. She has saved $2,500 for a down payment, and she can afford payments of $250 per month for 5 years. Her credit union has offered her an auto loan that charges 4.8% per year compounded monthly for 5 years. What is the largest loan she can afford? What is the most expensive car she can afford? b) Find the interest rate needed for an investment of $5100 to triple in 6 years if interest...
Kerri James is considering the purchase of a car. She wants to buy the new VW...
Kerri James is considering the purchase of a car. She wants to buy the new VW Beetle, which will cost her $17,600. She will finance 90% of the purchase price (i.e., make a 10% down payment) at an interest rate of 5.9 percent, with monthly payments over three years. How much money will she still owe on the loan at the end of one year(that is, immediately after she makes the 12th payment on her car loan)?
Durban Moving and Storage wants to have enough money available 5 years from now to purchase...
Durban Moving and Storage wants to have enough money available 5 years from now to purchase a new tractor-trailer. If the estimated cost will be $240,000, how much should the company set aside each year if the funds earn 6% per year? The company should set aside $  each year.
Jill plans to retire in 15 years. She hopes to be able to purchase an annuity...
Jill plans to retire in 15 years. She hopes to be able to purchase an annuity from an insurance company that will pay her $3,000 per month for 25 years during retirement. To this date she has saved $36,578. If she can earn 5 percent on her investments, how much would she have to invest each month for the next 15 years? (Assume the insurance company does not charge any fees.)
Hollie needs a new car in five years. She prefers to pay cash as opposed to...
Hollie needs a new car in five years. She prefers to pay cash as opposed to financing the car. Assuming she can earn 2 percent on her savings account and will need $25,000 in five years, how much does she need to save per month? N I/Y PV PMT FV
Ariel wants to save $1,500,000 by her retirement date (32 years from now). If she can...
Ariel wants to save $1,500,000 by her retirement date (32 years from now). If she can earn 9.5% (annual rate) on her investments, how much must she save per month in order to reach her goal of $1,500,000? Group of answer choices $3,906.25 $211.22 $1,208.26 $604.13
Ingrid wants to buy a ​$17000 car in 5 years. How much money must she deposit...
Ingrid wants to buy a ​$17000 car in 5 years. How much money must she deposit at the end of each quarter in an account paying ​5.9% compounded quarterly so that she will have enough to pay for her​ car?
Sue wants to save $1,000,000 in twenty years. She estimates she can earn 8.5 percent on...
Sue wants to save $1,000,000 in twenty years. She estimates she can earn 8.5 percent on savings. She intends to make deposits at the beginning of every year in a series of equal payments starting today. How much does she need to save each year to reach her goal?
Jill wants to buy a car but needs to calculate how much she can afford to...
Jill wants to buy a car but needs to calculate how much she can afford to borrow. The maximum she can repay is $1600 at the end of each quarter and the bank has indicated it will charge a fixed 7.1% p.a compounding quarterly. If she takes a loan for 4 years how much can she afford to borrow? (Do not use the $ sign or commas; include cents e.g 24500.09)
Alexis want to buy a house in 5 years. She wants to save $75,000 over the...
Alexis want to buy a house in 5 years. She wants to save $75,000 over the next five years for a down payment. If she can earn an annual rate of 9% on her savings, how much must she deposit in equal payments at the end of each month for the next five years to reach her goal? A) $1,250                    B) $765.87                  C) $994.38                  D) $8,420.13 Alexis is ready to buy her house. She will purchase the $450,000 house with...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT