Today your dream car costs 52300 You feel that the price of

Today, your dream car costs $52,300. You feel that the price of the car will increase at an annual rate 1.7 percent. If you plan to wait 7 years to buy the car, how much will it cost at that time?

$60,905.70

$58,850.26

$59,353.94

$59,850.71

$57,866.53

Solution

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

Hence

A=$52300(1+1.7/100)^7

=$52300*1.125243908

=$58850.26(Approx).