You are saving to buy a new car in two years. You currently have $5000 in an account that pays 4% annual interest compounded quarterly. You plan on adding to that account with quarterly deposits of $500 each over the next two years. Then you will take the balance of that account to use as a down payment on your new car. You expect the car you want will cost $32,000 and that you will be able to get a loan from the dealer at a 12% annual rate for a five-year term. How much will you have accumulated for the down payment?
You are saving to buy a new car in two years. You currently have $5000 in an account that pays 4% annual interest compounded quarterly. You plan on adding to that account with quarterly deposits of $500 each over the next two years. Then you will take the balance of that account to use as a down payment on your new car. You expect the car you want will cost $32,000 and that you will be able to get a loan from the dealer at a 12% annual rate for a five-year term. How much will you have accumulated for the down payment?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You are saving to buy a new car in two years. You currently have $5000 in an account that pays 4% annual interest compounded quarterly. You plan on adding to that account with quarterly deposits of $500 each over the next two years. Then you will take the balance of that account to use as a down payment on your new car. You expect the car you want will cost $32,000 and that you will be able to get a loan from the dealer at a 12% annual rate for a five-year term.
How much will you have accumulated for the down payment?
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