You're trying to save to buy a new $196,000 Ferrari. You have $46,000 today that can be invested at your bank.

You're trying to save to buy a new $196,000 Ferrari. You have $46,000 today that can be invested at your bank. The bank pays 5.4 percent annual interest on its accounts.

  

How long will it be before you have enough to buy the car? Explanation Note: Intermediate answers are shown below as rounded, but the full answer was used to complete the calculation. The time line is:       0   ?     –$46,000   $196,000 To answer this question, we can use either the FV or the PV formula. Both will give the same answer since they are the inverse of each other. We will use the FV formula, that is:   FV = PV(1 + r)t   Solving for t, we get:   t = ln(FV/PV)/ln(1 + r) t = ln($196,000/$46,000)/ln(1.054) t = 27.56 years Calculator Solution: Enter 5.4% $46,000 ±$196,000   N I/Y PV PMT FV Solve for 27.56

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