Author Question: Derek and his father have an agreement. If Derek can save 15,000, his father will pay the balance ... (Read 57 times)

DelorasTo · **on:** Jul 10, 2018

Derek and his father have an agreement. If Derek can save 15,000, his father will pay the balance toward a used car (up to a total of 20,000).

If Derek can save 3,800 per year, how long will it take him to reach 15,000 if he invests the money into an account earning an annual rate of 4.25? Use a financial calculator.
What will be an ideal response?

Question 2

The time necessary for a deposited check to clear through the commercial banking system causes
which of the following types of floats?

A) transit B) disbursing C) mail D) processing

Mholman93 · **Reply #1 on:** Jul 10, 2018

Answer to Question 1

Answer: The financial calculator makes short work of this problem.
MODE = END
INPUT ? 4.25 0 3,800 -15,000
KEY N I/Y PV PMT FV
CPT 3.726

For those who like algebra:
n = /ln(1 + r) = /ln(.0425) = 3.73 years.
Explanation: Use a financial calculator or a spreadsheet.

Answer to Question 2

A