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21 April, 03:22

Today, your dream car costs $61,100. You feel that the price of the car will increase at an annual rate 2.1 percent. If you plan to wait 5 years to buy the car, how much will it cost at that time?

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  1. 21 April, 05:51
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    Answer: $67,515.50

    Explanation:

    Given dа ta:

    Cost of car = $61,100

    Annual increase in rate = 2.1%

    Waiting duration = 5 years

    Therefore:

    Increase in Cost of car when waiting for 1 year

    = interest of 1year + Original cost

    = $61,100 * 0.021 + $61,100

    = $1283.1 + $61,100

    = $62,383.1

    Increase in cost of car when waiting for 5 years before purchase

    = Increases in rate + Original cost

    = 0.021 * 5 * $61,100 + $61,100

    = $6,415.5 + $61,100

    = $67,515.5

    After 5 years the car would cost approximately $67,515.50
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