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A car's price is currently $20,000 and is expected to rise by 4% a year. If the interest rate is 6%, how much do you need to put aside today to buy the car one year from now

Respuesta :

Answer:

the amount need to put aside is $19,623

Explanation:

The computation of the amount need to put aside is shown below;

= (Current car price × (1 + expected rise percentage)) ÷ (1 + rate of interest)

= ($20,000 × 1.04) ÷ 1.06

= $19,623

hence, the amount need to put aside is $19,623

We simply applied the above formula so that the correct value could come

And, the same is to be considered

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