Question

Suppose you are committed to owning a $250,000 Ferrari and you have $100,000 now. If you believe your mutual fund can achieve a 12 percent annual rate of return and you are able to save $1000 per month, how long you will have to wait for buying the car?

	A.	3.5 years
	B.	4.7 years
	C.	5.3 years
	D.	8.6 years

Answer 1

Ans:- In this question, we need to find the number of years it will take to buy the car. First, we will find the number of periods and then we will divide it by 12 to get the number of years. we will use the NPER function of excel to find the Number of Periods.

Rate=12%/12, Pmt = -$1,000, PV = -$100,000, FV = $250,000

Therefore, the number of years it will take to buy the car will be 4.7 years (approx). option B is the right answer.

Note:- If this answer helps you pls give thumbs up.