Question 2 - Homework 1
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Statistics
Date
Feb 20, 2024
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1/27/24, 12:50 PM
Question 2 - Homework 1 - Connect
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Explanation
Note: Intermediate answers are shown below as rounded, but the full answer was used to
complete the calculation.
The time line is:
0
–$53,000
We can use either the FV or the PV formula. Both will give the same answer since they are the
inverse of each other. We will use the FV formula, that is:
FV = PV(1 + r
)
t
Solving for t
, we get:
t
= ln (FV/PV)/ln (1 + r
)
t
= ln ($203,000/$53,000)/ln 1.061
t
= 22.68 years
Calculator Solution:
Enter
6.1%
$53,000
±$203,000
N
I/Y
PV
PMT
FV
Solve for
22.68
Homework 1
90/100 Total points awarded
Help Exit
Submitted
You're trying to save to buy a new $203,000 Ferrari. You have $53,000 today that can
be invested at your bank. The bank pays 6.1 percent annual interest on its
accounts. How long will it be before you have enough to buy the car? (Do not round
intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Number of years
22.68
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