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Now say you invest the $7,500 and the highest interest rate you can find is 4.5% compounded annually, but you would have to leave the investment in the account for a minimum of 4 years. If you decide to wait 4 years to buy the car, how much more money will you have to save to buy a car at the $9,500 price?  Use the compound interest formula A = P (1 + i)n. (Round final answer to the nearest cent, but otherwise don’t round any intermediate values)

Sagot :

anthougo

The amount of money that you will have to save to buy a car at the $9,500 price is $556.11 ($9,500 - $8,943.89).

How is the amount of money needed determined?

The amount of money needed can be determined by calculating the future value of $7,500 invested at 4.5% for 4 years.

Then, the result, which is the future value, $8,943.89, is deducted from the $9,500 price, to determine the additional savings required.

The future value of an investment can be calculated using the future value formula, A = P (1 + i)^n.

Where:

A = future value

P = Present value of investment

i = interest rate

n = number of periods.

The future value can also be determined using an online finance calculator, as follows.

Data and Calculations:

N (# of periods) = 4 years

I/Y (Interest per year) = 4.5%

PV (Present Value) = $7,500

PMT (Periodic Payment) = $0

Results:

FV = $8,943.89

Total Interest = $1,443.89

Thus, the amount of money that you will have to save to buy a car at the $9,500 price is $556.11.

Learn more about future value calculations at https://brainly.com/question/24703884

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