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You hope to buy your dream car five years from now. Today, that car costs $62,500. You expect the price to increase by an average of 2.9 percent per year. How much will your dream car cost by the time you are ready to buy it?

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estebancgo

Answer:

the value after 5 years is 72,103.59

Explanation:

One can calculate this kind of problems as the calculation of future value of the today car cost, so take into account the next formula:

[tex]FV=PV*(1+i)^{n}[/tex]

where FV is future value, PV is the present value, i is the periodic interest rate and n is the number of periods. So applying to this particular problem we have:

[tex]FV=62,500*(1+0.029)^{5}[/tex]

[tex]FV=72,103.59[/tex]

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