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?

Question

Quizplus · Accepted Answer

To solve this problem, we need to use the formula for compound interest:

FV = PV * (1 + r)^n

where FV is the future value, PV is the present value, r is the annual interest rate as a decimal, and n is the number of years.

In this case, PV = $62,500, r = 0.029, and n = 5. Plugging these values into the formula, we get:

FV = $62,500 * (1 + 0.029)^5
FV = $72,103.59

Therefore, the answer is Choice C: $72,103.59.

You Hope to Buy Your Dream Car Five Years from Now