Question 1149879: Suppose the sticker price on a particular car was $17,090. A consumer expects to qualify for a rebate of $4500 and will receive an additional $3500 for trading in his current car. Six years ago the consumer invested $7500 in a savings account earning 2% APR compounded monthly to the nearest dollar. how much has the consumer saved to purchase the car.
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! the net cost of the car is 9090.
that's 17090 - 4500 - 3500.
taxes andother costs are no being considered for this problem.
6 years ago he invested 7500 in a savings account earning 2% apr compounded monthly.
the formula to determine how much he had after 6 years is:
f = p * (1 + r) ^ n
f is the future value
p is the present value
r is the interest rate per time period
n is the number of time periods.
the time periods are months.
the formula uses the interest rate, not the interest rate percent.
2% per year divided by 100 equals an interest rate of .02 per year.
divide that by 12 to get an interest rate of .02/12 = .0016666666.... per month.
the number of months is equal to 6 * 12 = 72.
the formula becomes:
f = 7500 * (1 + .02/12) ^ (6 * 12).
the result is f = 8455.381745.
that's what the consumer has saved.
round to the nearest dollar to get $8,455.
since the car will cost $9,090, the consumer is short by 9090 - 8455 = $635.
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