You\'re trying to save to buy a new $170,000 Ferrari. You have $39,000 today tha

Question

You're trying to save to buy a new $170,000 Ferrari. You have $39,000 today that can be invested at your bank. The bank pays 5.0 percent annual interest on its accounts. How long will it be before you have enough to buy the car?

30.67 years

29.92 years

30.17 years

28.17 years

30.42 years

You're trying to save to buy a new $170,000 Ferrari. You have $39,000 today that can be invested at your bank. The bank pays 5.0 percent annual interest on its accounts. How long will it be before you have enough to buy the car?

Explanation / Answer

A = P(1+r)t

=> 170,000 = 39000(1+0.05)t

=> ln(170000/39000) = t * ln(1.05)

=> t =  ln(170000/39000) / ln(1.05) = 30.17 years

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