Question: Please do part two. 2. Suppose you can pay for the car ... ? Two years ago, you invested $10,000 in a savings account earning

Please do part two. 2. Suppose you can pay for the car ... ?

Two years ago, you invested $10,000 in a savings account earning an interest rate of 8% (APR) compounded semi-annually. At the time, you thought these savings would grow enough for you to buy a new car five years later (i.e. in three years from now). However, you just re-estimated the price that you will have to pay for the new car in three years at $18,000. How much more money do you need to put into your savings account today for it to grow to this new estimate in three years? a. Calculate how much money is in the account today. b. Calculate how much money you need in the account today in order for it to grow to $18,000 in three years. c. How much money must you add to the account today? Now suppose you can pay for the car over some time. In particular, you will make a down payment of $6,000 at the time you get the car (three years from now) and make additional payments of $6, 500 at the end of each of following two years. With this new offer, how much money do you need to put into your account today? d. Draw the timeline of cash flows starting today. e. calculate how much money you need in the account today in order to afford the three auto payments. How much money must you add to the account today

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